The WACC of Agency Group Australia Ltd (AU1.AX) is 7.6%.
| Range | Selected | |
| Cost of equity | 3.30% - 7.20% | 5.25% |
| Tax rate | 15.00% - 32.30% | 23.65% |
| Cost of debt | 4.00% - 21.00% | 12.50% |
| WACC | 3.4% - 11.8% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.34 | 0.2 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 3.30% | 7.20% |
| Tax rate | 15.00% | 32.30% |
| Debt/Equity ratio | 1.85 | 1.85 |
| Cost of debt | 4.00% | 21.00% |
| After-tax WACC | 3.4% | 11.8% |
| Selected WACC | 7.6% | |
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 AU1.AX:
cost_of_equity (5.25%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (-0.34) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.