The WACC of Song Da Corporation JSC (SJG.VN) is 10.5%.
| Range | Selected | |
| Cost of equity | 13.10% - 16.00% | 14.55% |
| Tax rate | 15.40% - 16.90% | 16.15% |
| Cost of debt | 4.50% - 6.00% | 5.25% |
| WACC | 9.4% - 11.6% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.09 | 1.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.10% | 16.00% |
| Tax rate | 15.40% | 16.90% |
| Debt/Equity ratio | 0.66 | 0.66 |
| Cost of debt | 4.50% | 6.00% |
| After-tax WACC | 9.4% | 11.6% |
| Selected WACC | 10.5% | |
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 SJG.VN:
cost_of_equity (14.55%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.09) + 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.