The WACC of Class Ltd (CL1.AX) is 9.2%.
| Range | Selected | |
| Cost of equity | 8.40% - 10.80% | 9.60% |
| Tax rate | 31.30% - 31.90% | 31.60% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 8.1% - 10.3% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.01 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 10.80% |
| Tax rate | 31.30% | 31.90% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 8.1% | 10.3% |
| Selected WACC | 9.2% | |
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 CL1.AX:
cost_of_equity (9.60%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (1.01) + 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.