The WACC of SMC Trading Investment JSC (SMC.VN) is 7.4%.
| Range | Selected | |
| Cost of equity | 9.40% - 16.60% | 13.00% |
| Tax rate | 12.40% - 15.50% | 13.95% |
| Cost of debt | 6.90% - 7.00% | 6.95% |
| WACC | 6.8% - 8.1% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.7 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.40% | 16.60% |
| Tax rate | 12.40% | 15.50% |
| Debt/Equity ratio | 3.79 | 3.79 |
| Cost of debt | 6.90% | 7.00% |
| After-tax WACC | 6.8% | 8.1% |
| Selected WACC | 7.4% | |
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 SMC.VN:
cost_of_equity (13.00%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.7) + 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.