The WACC of Bushveld Minerals Ltd (BMN.L) is 6.2%.
| Range | Selected | |
| Cost of equity | 10.40% - 27.50% | 18.95% |
| Tax rate | 8.70% - 14.00% | 11.35% |
| Cost of debt | 4.40% - 7.00% | 5.70% |
| WACC | 4.5% - 7.9% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.07 | 3.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.40% | 27.50% |
| Tax rate | 8.70% | 14.00% |
| Debt/Equity ratio | 10.66 | 10.66 |
| Cost of debt | 4.40% | 7.00% |
| After-tax WACC | 4.5% | 7.9% |
| Selected WACC | 6.2% | |
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 BMN.L:
cost_of_equity (18.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.07) + 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.