The WACC of Viet Phat Import Export Trading Investment JSC (VPG.VN) is 6.5%.
| Range | Selected | |
| Cost of equity | 4.20% - 17.00% | 10.60% |
| Tax rate | 21.10% - 22.10% | 21.60% |
| Cost of debt | 7.00% - 8.20% | 7.60% |
| WACC | 5.4% - 7.7% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | -0.06 | 1.07 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 4.20% | 17.00% |
| Tax rate | 21.10% | 22.10% |
| Debt/Equity ratio | 7.14 | 7.14 |
| Cost of debt | 7.00% | 8.20% |
| After-tax WACC | 5.4% | 7.7% |
| Selected WACC | 6.5% | |
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 VPG.VN:
cost_of_equity (10.60%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (-0.06) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.