The WACC of Vietnam Industrial Construction Corp (VVN.VN) is 10.3%.
| Range | Selected | |
| Cost of equity | 172.60% - 229.20% | 200.90% |
| Tax rate | 3.10% - 7.60% | 5.35% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 8.3% - 12.3% | 10.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 17.88 | 21.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 172.60% | 229.20% |
| Tax rate | 3.10% | 7.60% |
| Debt/Equity ratio | 37.03 | 37.03 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 8.3% | 12.3% |
| Selected WACC | 10.3% | |
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 VVN.VN:
cost_of_equity (200.90%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (17.88) + 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.