The WACC of Raindrop Ventures Inc (RAYN.CN) is 9.2%.
| Range | Selected | |
| Cost of equity | 8.00% - 10.50% | 9.25% |
| Tax rate | 26.50% - 26.50% | 26.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.0% - 10.5% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.97 | 1.07 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 10.50% |
| Tax rate | 26.50% | 26.50% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.0% | 10.5% |
| Selected WACC | 9.2% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for RAYN.CN:
cost_of_equity (9.25%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.97) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.