ABB.AX WACC - Weighted Average Cost of Capital

The WACC of Aussie Broadband Ltd (ABB.AX) is 7.9%.

The Cost of Equity of Aussie Broadband Ltd (ABB.AX) is 9.00%.

The Cost of Debt of Aussie Broadband Ltd (ABB.AX) is 5.50%.

	Range	Selected
Cost of equity	7.50% - 10.50%	9.00%
Tax rate	17.10% - 25.30%	21.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.6% - 9.3%	7.9%

WACC

ABB.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.69	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	10.50%

Tax rate	17.10%	25.30%
Debt/Equity ratio	0.29	0.29
Cost of debt	4.00%	7.00%

After-tax WACC	6.6%	9.3%


Selected WACC	7.9%

ABB.AX'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 ABB.AX:

cost_of_equity (9.00%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.69) + 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.