The WACC of 8VI Holdings Ltd (8VI.AX) is 7.2%.
| Range | Selected | |
| Cost of equity | 9.80% - 16.10% | 12.95% |
| Tax rate | 12.20% - 13.60% | 12.90% |
| Cost of debt | 4.60% - 5.20% | 4.90% |
| WACC | 6.0% - 8.4% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.14 | 1.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.80% | 16.10% |
| Tax rate | 12.20% | 13.60% |
| Debt/Equity ratio | 1.94 | 1.94 |
| Cost of debt | 4.60% | 5.20% |
| After-tax WACC | 6.0% | 8.4% |
| Selected WACC | 7.2% | |
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 8VI.AX:
cost_of_equity (12.95%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.14) + 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.