033780.KS WACC - Weighted Average Cost of Capital

The WACC of KT&G Corp (033780.KS) is 8.2%.

The Cost of Equity of KT&G Corp (033780.KS) is 8.50%.

The Cost of Debt of KT&G Corp (033780.KS) is 5.90%.

	Range	Selected
Cost of equity	7.20% - 9.80%	8.50%
Tax rate	25.40% - 26.90%	26.15%
Cost of debt	4.00% - 7.80%	5.90%
WACC	6.9% - 9.5%	8.2%

WACC

033780.KS WACC calculation

Category	Low	High

Long-term bond rate	3.1%	3.6%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.71	0.85

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.80%

Tax rate	25.40%	26.90%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	7.80%

After-tax WACC	6.9%	9.5%


Selected WACC	8.2%

033780.KS'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 033780.KS:

cost_of_equity (8.50%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.71) + 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.