AIR.NZ
Air New Zealand Ltd
Price:  
0.61 
NZD
Volume:  
1,486,195.00
New Zealand | Airlines
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AIR.NZ WACC - Weighted Average Cost of Capital

The WACC of Air New Zealand Ltd (AIR.NZ) is 5.8%.

The Cost of Equity of Air New Zealand Ltd (AIR.NZ) is 8.60%.
The Cost of Debt of Air New Zealand Ltd (AIR.NZ) is 5.50%.

Range Selected
Cost of equity 6.60% - 10.60% 8.60%
Tax rate 28.00% - 28.80% 28.40%
Cost of debt 4.00% - 7.00% 5.50%
WACC 4.4% - 7.3% 5.8%
WACC

AIR.NZ WACC calculation

Category Low High
Long-term bond rate 4.3% 4.8%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.45 0.87
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 10.60%
Tax rate 28.00% 28.80%
Debt/Equity ratio 1.45 1.45
Cost of debt 4.00% 7.00%
After-tax WACC 4.4% 7.3%
Selected WACC 5.8%

AIR.NZ'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 AIR.NZ:

cost_of_equity (8.60%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.45) + 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.