The WACC of Ausmon Resources Ltd (AOA.AX) is 8.0%.
Range | Selected | |
Cost of equity | 7.0% - 10.3% | 8.65% |
Tax rate | 30.0% - 30.0% | 30% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.6% - 9.4% | 8.0% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.59 | 0.87 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.0% | 10.3% |
Tax rate | 30.0% | 30.0% |
Debt/Equity ratio | 0.16 | 0.16 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.6% | 9.4% |
Selected WACC | 8.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
AOA.AX | Ausmon Resources Ltd | 0.16 | 1.01 | 0.91 |
ANW.AX | Aus Tin Mining Ltd | 0.4 | -0.03 | -0.02 |
FAU.AX | First Au Ltd | 0 | -1.64 | -1.63 |
KFM.AX | Kingfisher Mining Ltd | 0.02 | 0.55 | 0.54 |
MQR.AX | Marquee Resources Ltd | 0.01 | 0.06 | 0.06 |
NME.AX | Nex Metals Explorations Ltd | 0.07 | 1.67 | 1.59 |
NWM.AX | Norwest Minerals Ltd | 0.04 | 1.07 | 1.05 |
SUH.AX | Southern Hemisphere Mining Ltd | 0.02 | 2.04 | 2.02 |
WML.AX | Woomera Mining Ltd | 0.02 | 0.62 | 0.61 |
XTC.AX | Xantippe Resources Ltd | 0.02 | -0.15 | -0.14 |
Low | High | |
Unlevered beta | 0.35 | 0.73 |
Relevered beta | 0.39 | 0.81 |
Adjusted relevered beta | 0.59 | 0.87 |
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 AOA.AX:
cost_of_equity (8.65%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.59) + 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.