The WACC of CI Resources Ltd (CII.AX) is 6.6%.
Range | Selected | |
Cost of equity | 6.1% - 11.2% | 8.65% |
Tax rate | 26.4% - 30.6% | 28.5% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 4.7% - 8.5% | 6.6% |
Category | Low | High |
Long-term bond rate | 4.1% | 4.6% |
Equity market risk premium | 5.5% | 6.5% |
Adjusted beta | 0.36 | 0.93 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.1% | 11.2% |
Tax rate | 26.4% | 30.6% |
Debt/Equity ratio | 0.76 | 0.76 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 4.7% | 8.5% |
Selected WACC | 6.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
CII.AX | CI Resources Ltd | 0.76 | 0.54 | 0.35 |
ATR.AX | Astron Ltd | 0.23 | 0.95 | 0.82 |
IMA.AX | Image Resources NL | 0.13 | 0.77 | 0.71 |
MLX.AX | Metals X Ltd | 0.01 | 0.18 | 0.18 |
MRC.AX | Mineral Commodities Ltd | 0.41 | 0.21 | 0.16 |
MSV.AX | Mitchell Services Ltd | 0.39 | 1.04 | 0.81 |
NTU.AX | Northern Minerals Ltd | 0.06 | 0.21 | 0.21 |
PAN.AX | Panoramic Resources Ltd | 0.87 | -0.21 | -0.13 |
RVR.AX | Red River Resources Ltd | 0.18 | 1.7 | 1.5 |
SWK.AX | Swick Mining Services Ltd | 0.31 | 1.15 | 0.94 |
Low | High | |
Unlevered beta | 0.29 | 0.75 |
Relevered beta | 0.04 | 0.9 |
Adjusted relevered beta | 0.36 | 0.93 |
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 CII.AX:
cost_of_equity (8.65%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (0.36) + 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.