839.HK WACC - Weighted Average Cost of Capital

The WACC of China Education Group Holdings Ltd (839.HK) is 7.9%.

The Cost of Equity of China Education Group Holdings Ltd (839.HK) is 10.30%.

The Cost of Debt of China Education Group Holdings Ltd (839.HK) is 6.85%.

	Range	Selected
Cost of equity	7.70% - 12.90%	10.30%
Tax rate	1.50% - 2.00%	1.75%
Cost of debt	5.60% - 8.10%	6.85%
WACC	6.2% - 9.5%	7.9%

WACC

839.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.81	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	12.90%

Tax rate	1.50%	2.00%
Debt/Equity ratio	2.11	2.11
Cost of debt	5.60%	8.10%

After-tax WACC	6.2%	9.5%


Selected WACC	7.9%

839.HK'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 839.HK:

cost_of_equity (10.30%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.81) + 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.