TEDU WACC - Weighted Average Cost of Capital
The WACC of Tarena International Inc (TEDU) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.7% - 8.5% | 7.1% |
| Tax rate | 4.1% - 10.4% | 7.25% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.4% - 7.0% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 0.31 | 0.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 8.5% |
| Tax rate | 4.1% | 10.4% |
| Debt/Equity ratio | 0.58 | 0.58 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.4% | 7.0% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TEDU | Tarena International Inc | 0.58 | -0.28 | -0.18 |
| AMBO | Ambow Education Holding Ltd | 0.04 | 1.06 | 1.02 |
| ASPU | Aspen Group Inc | 2.45 | 0.56 | 0.17 |
| CATG | Capstone Technologies Group Inc | 54.38 | -0.67 | -0.01 |
| EDTK | Skillful Craftsman Education Technology Ltd | 0.96 | -0.15 | -0.08 |
| EVCI | EVCI Career Colleges Holding Corp | 25.8 | 0.49 | 0.02 |
| FEDU | Four Seasons Education (Cayman) Inc | 0.01 | 0.43 | 0.42 |
| LEAI | Legacy Education Alliance Inc | 1723.26 | -2.06 | 0 |
| LTRE | Learning Tree International Inc | 0.31 | 0.92 | 0.71 |
| MBA.TO | CIBT Education Group Inc | 11.24 | 1.19 | 0.1 |
| Low | High | |
| Unlevered beta | 0.01 | 0.13 |
| Relevered beta | -0.03 | 0.33 |
| Adjusted relevered beta | 0.31 | 0.55 |
TEDU's CAPM model and how its cost of Equity is calculated
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 TEDU:
cost_of_equity (7.10%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.31) + 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.