TRIP.CN WACC - Weighted Average Cost of Capital
The WACC of Red Light Holland Corp (TRIP.CN) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.4% | 6.5% |
| Tax rate | 0.5% - 1.1% | 0.8% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 7.1% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.47 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.4% |
| Tax rate | 0.5% | 1.1% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 7.1% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TRIP.CN | Red Light Holland Corp | 0.17 | 1.31 | 1.13 |
| MO | Altria Group Inc | 0.25 | 0.04 | 0.03 |
| NHLE | Nhale Inc | 0.72 | 1.01 | 0.59 |
| PM | Philip Morris International Inc | 0.17 | 0.1 | 0.09 |
| RLX | RLX Technology Inc | 0.02 | 0.32 | 0.32 |
| TPB | Turning Point Brands Inc | 0.19 | 0.72 | 0.61 |
| UVV | Universal Corp | 0.72 | 0.38 | 0.22 |
| VGR | Vector Group Ltd | 0.58 | 0.19 | 0.12 |
| VHUB | Vapor Hub International Inc | 3.84 | 1.04 | 0.22 |
| VPRB | VPR Brands LP | 0.32 | -0.28 | -0.22 |
| Low | High | |
| Unlevered beta | 0.18 | 0.26 |
| Relevered beta | 0.21 | 0.3 |
| Adjusted relevered beta | 0.47 | 0.53 |
TRIP.CN'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 TRIP.CN:
cost_of_equity (6.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.