CGA.AX WACC - Weighted Average Cost of Capital
The WACC of Contango Asset Management Ltd (CGA.AX) is 7.9%.
| Range | Selected | |
| Cost of equity | 6.9% - 9.6% | 8.25% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.7% - 9.2% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.51 | 0.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 9.6% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.7% | 9.2% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CGA.AX | Contango Asset Management Ltd | 0.08 | 1.1 | 1.04 |
| ASW.AX | Advanced Share Registry Ltd | 0.01 | 0.3 | 0.3 |
| AVC.AX | Auctus Investment Group Ltd | 0.05 | 0.17 | 0.16 |
| BWF.AX | Blackwall Ltd | 0.83 | 1 | 0.63 |
| CIW.AX | Clime Investment Management Ltd | 0.02 | 0.13 | 0.12 |
| DCL.AX | Domacom Australia Ltd | 0.71 | 3.8 | 2.54 |
| INV.AX | Investsmart Group Ltd | 0.03 | 1.87 | 1.84 |
| KAM.AX | K2 Asset Management Holdings Ltd | 0 | 1.36 | 1.36 |
| MAI.AX | Mainstream Group Holdings Ltd | 0.03 | 1.79 | 1.75 |
| PAC.AX | Pacific Current Group Ltd | 0.18 | 0.19 | 0.17 |
| Low | High | |
| Unlevered beta | 0.5 | 1.17 |
| Relevered beta | 0.27 | 0.54 |
| Adjusted relevered beta | 0.51 | 0.69 |
CGA.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 CGA.AX:
cost_of_equity (8.25%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (0.51) + 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.