The WACC of Xuan Mai Investment and Construction Corp (XMC.VN) is 10.1%.
| Range | Selected | |
| Cost of equity | 16.90% - 23.80% | 20.35% |
| Tax rate | 21.30% - 28.00% | 24.65% |
| Cost of debt | 6.40% - 7.00% | 6.70% |
| WACC | 9.0% - 11.3% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.49 | 1.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.90% | 23.80% |
| Tax rate | 21.30% | 28.00% |
| Debt/Equity ratio | 2 | 2 |
| Cost of debt | 6.40% | 7.00% |
| After-tax WACC | 9.0% | 11.3% |
| Selected WACC | 10.1% | |
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 XMC.VN:
cost_of_equity (20.35%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.49) + 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.