The WACC of Digitalx Ltd (DCC.AX) is 7.6%.
Range | Selected | |
Cost of equity | 6.1% - 9.1% | 7.6% |
Tax rate | 30.0% - 30.0% | 30% |
Cost of debt | 4.0% - 4.6% | 4.3% |
WACC | 6.1% - 9.1% | 7.6% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.41 | 0.67 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.1% | 9.1% |
Tax rate | 30.0% | 30.0% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 4.0% | 4.6% |
After-tax WACC | 6.1% | 9.1% |
Selected WACC | 7.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
DCC.AX | Digitalx Ltd | 0 | 2.81 | 2.8 |
ADA.AX | Adacel Technologies Ltd | 0.3 | 0.79 | 0.66 |
AND.AX | Ansarada Group Ltd | 0.02 | 0.42 | 0.41 |
DTC.AX | Damstra Holdings Ltd | 0.21 | -1.06 | -0.93 |
EVS.AX | Envirosuite Ltd | 0.1 | -1.22 | -1.14 |
IS3.AX | I Synergy Group Ltd | 0 | 1.57 | 1.56 |
JCS.AX | JCurve Solutions Ltd | 0.04 | 2.05 | 1.99 |
ODA.AX | Orcoda Ltd | 0.38 | 1.19 | 0.94 |
UBN.AX | Urbanise com Ltd | 0.01 | -0.41 | -0.41 |
VR1.AX | Vection Technologies Ltd | 0.18 | 0 | 0 |
XF1.AX | Xref Ltd | 0.16 | 0.22 | 0.2 |
Low | High | |
Unlevered beta | 0.2 | 0.66 |
Relevered beta | 0.12 | 0.51 |
Adjusted relevered beta | 0.41 | 0.67 |
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 DCC.AX:
cost_of_equity (7.60%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.41) + 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.