The WACC of Sesan 4A Hydroelectric JSC (S4A.VN) is 7.0%.
| Range | Selected | |
| Cost of equity | 6.10% - 9.10% | 7.60% |
| Tax rate | 5.50% - 6.20% | 5.85% |
| Cost of debt | 4.00% - 5.80% | 4.90% |
| WACC | 5.7% - 8.3% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.36 | 0.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.10% | 9.10% |
| Tax rate | 5.50% | 6.20% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 4.00% | 5.80% |
| After-tax WACC | 5.7% | 8.3% |
| Selected WACC | 7.0% | |
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 S4A.VN:
cost_of_equity (7.60%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.36) + 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.