The WACC of Consolidated Zinc Ltd (CZL.AX) is 4.8%.
| Range | Selected | |
| Cost of equity | 4.70% - 7.80% | 6.25% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 4.90% - 4.90% | 4.90% |
| WACC | 4.0% - 5.6% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.11 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.70% | 7.80% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.90% | 4.90% |
| After-tax WACC | 4.0% | 5.6% |
| Selected WACC | 4.8% | |
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 CZL.AX:
cost_of_equity (6.25%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (0.11) + 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.