The WACC of Rang Dong Holding JSC (RDP.VN) is 10.3%.
| Range | Selected | |
| Cost of equity | 22.70% - 54.00% | 38.35% |
| Tax rate | 24.00% - 33.50% | 28.75% |
| Cost of debt | 7.00% - 8.00% | 7.50% |
| WACC | 7.9% - 12.7% | 10.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 2.1 | 4.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.70% | 54.00% |
| Tax rate | 24.00% | 33.50% |
| Debt/Equity ratio | 5.61 | 5.61 |
| Cost of debt | 7.00% | 8.00% |
| After-tax WACC | 7.9% | 12.7% |
| Selected WACC | 10.3% | |
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 RDP.VN:
cost_of_equity (38.35%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (2.1) + 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.