The WACC of Bill Identity Ltd (BID.AX) is 7.8%.
| Range | Selected | |
| Cost of equity | 6.70% - 9.20% | 7.95% |
| Tax rate | 1.60% - 2.10% | 1.85% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 6.6% - 9.0% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.48 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 9.20% |
| Tax rate | 1.60% | 2.10% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 6.6% | 9.0% |
| Selected WACC | 7.8% | |
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 BID.AX:
cost_of_equity (7.95%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (0.48) + 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.