D2O.AX WACC - Weighted Average Cost of Capital

The WACC of Duxton Water Ltd (D2O.AX) is 5.8%.

The Cost of Equity of Duxton Water Ltd (D2O.AX) is 6.70%.

The Cost of Debt of Duxton Water Ltd (D2O.AX) is 5.50%.

	Range	Selected
Cost of equity	5.90% - 7.50%	6.70%
Tax rate	29.80% - 30.00%	29.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.9% - 6.6%	5.8%

WACC

D2O.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.36	0.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	7.50%

Tax rate	29.80%	30.00%
Debt/Equity ratio	0.48	0.48
Cost of debt	4.00%	7.00%

After-tax WACC	4.9%	6.6%


Selected WACC	5.8%

D2O.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 D2O.AX:

cost_of_equity (6.70%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * 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.