The WACC of Song Da 3 JSC (SD3.VN) is 5.0%.
| Range | Selected | |
| Cost of equity | 7.30% - 10.90% | 9.10% |
| Tax rate | 22.10% - 22.30% | 22.20% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.8% - 6.3% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.48 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.30% | 10.90% |
| Tax rate | 22.10% | 22.30% |
| Debt/Equity ratio | 5.36 | 5.36 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.8% | 6.3% |
| Selected WACC | 5.0% | |
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 SD3.VN:
cost_of_equity (9.10%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.48) + 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.