YQ WACC - Weighted Average Cost of Capital
The WACC of 17 Education & Technology Group Inc (YQ) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.1% | 6.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.3% - 6.1% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.1% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.3% | 6.1% |
| Selected WACC | 5.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| YQ | 17 Education & Technology Group Inc | 0.93 | 0.3 | 0.18 |
| AFYA | Afya Ltd | 0.31 | 0.58 | 0.47 |
| ASPU | Aspen Group Inc | 2.43 | 0.37 | 0.13 |
| CLCN | Creative Learning Corp | 0.18 | -0.32 | -0.28 |
| EDTK | Skillful Craftsman Education Technology Ltd | 0.89 | -0.18 | -0.11 |
| EVCI | EVCI Career Colleges Holding Corp | 25.8 | 0.49 | 0.02 |
| HLG | Hailiang Education Group Inc | 0.02 | -0.01 | -0.01 |
| MBA.TO | CIBT Education Group Inc | 11.24 | 1.19 | 0.13 |
| ONE | OneSmart International Education Group Ltd | 34.06 | 0.09 | 0 |
| TEDU | Tarena International Inc | 0.58 | -0.28 | -0.2 |
| VTRU | Vitru Ltd | 1.46 | 0.74 | 0.36 |
| Low | High | |
| Unlevered beta | 0 | 0.13 |
| Relevered beta | 0 | 0.12 |
| Adjusted relevered beta | 0.33 | 0.41 |
YQ'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 YQ:
cost_of_equity (6.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.