The WACC of Trip.com Group Ltd (TCOM) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.40% - 8.10% | 6.75% |
| Tax rate | 28.30% - 32.30% | 30.30% |
| Cost of debt | 4.00% - 7.20% | 5.60% |
| WACC | 4.9% - 7.5% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 1.3% | 1.8% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.87 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.40% | 8.10% |
| Tax rate | 28.30% | 32.30% |
| Debt/Equity ratio | 0.22 | 0.22 |
| Cost of debt | 4.00% | 7.20% |
| After-tax WACC | 4.9% | 7.5% |
| Selected WACC | 6.2% | |
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 TCOM:
cost_of_equity (6.75%) = risk_free_rate (1.55%) + equity_risk_premium (5.20%) * adjusted_beta (0.87) + 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.