The WACC of City Chic Collective Ltd (CCX.AX) is 6.4%.
| Range | Selected | |
| Cost of equity | 10.00% - 15.20% | 12.60% |
| Tax rate | 18.80% - 26.60% | 22.70% |
| Cost of debt | 4.00% - 5.10% | 4.55% |
| WACC | 5.4% - 7.4% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.17 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 15.20% |
| Tax rate | 18.80% | 26.60% |
| Debt/Equity ratio | 2.19 | 2.19 |
| Cost of debt | 4.00% | 5.10% |
| After-tax WACC | 5.4% | 7.4% |
| Selected WACC | 6.4% | |
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 CCX.AX:
cost_of_equity (12.60%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.17) + 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.