CEL.AX WACC - Weighted Average Cost of Capital

The WACC of Challenger Exploration Ltd (CEL.AX) is 7.5%.

The Cost of Equity of Challenger Exploration Ltd (CEL.AX) is 7.75%.

The Cost of Debt of Challenger Exploration Ltd (CEL.AX) is 6.20%.

	Range	Selected
Cost of equity	6.30% - 9.20%	7.75%
Tax rate	7.50% - 9.40%	8.45%
Cost of debt	6.20% - 6.20%	6.20%
WACC	6.2% - 8.7%	7.5%

WACC

CEL.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.45	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.20%

Tax rate	7.50%	9.40%
Debt/Equity ratio	0.14	0.14
Cost of debt	6.20%	6.20%

After-tax WACC	6.2%	8.7%


Selected WACC	7.5%

CEL.AX's CAPM model and how its cost of Equity is calculated

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 CEL.AX:

cost_of_equity (7.75%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.45) + 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.