DUKE.L WACC - Weighted Average Cost of Capital
The WACC of Duke Royalty Ltd (DUKE.L) is 9.5%.
| Range | Selected | |
| Cost of equity | 9.6% - 14.2% | 11.9% |
| Tax rate | 5.2% - 8.6% | 6.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.0% - 11.0% | 9.5% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.94 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.6% | 14.2% |
| Tax rate | 5.2% | 8.6% |
| Debt/Equity ratio | 0.5 | 0.5 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.0% | 11.0% |
| Selected WACC | 9.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DUKE.L | Duke Royalty Ltd | 0.5 | 0.55 | 0.38 |
| AJG.L | Atlantis Japan Growth Fund Ltd | 0.04 | 0.67 | 0.65 |
| AJIT.L | Aberdeen Japan Investment Trust PLC | 0.13 | 0.54 | 0.48 |
| ARTL.L | Alpha Real Trust Ltd | 0.07 | 0.53 | 0.5 |
| ASCI.L | Aberdeen Smaller Companies Income Trust PLC | 0.13 | 1.37 | 1.22 |
| CYN.L | CQS Natural Resources Growth and Income PLC | 0.14 | 1.43 | 1.26 |
| HOT.L | Henderson Opportunities Trust PLC | 0.08 | 1.63 | 1.52 |
| JEFI.L | Jupiter Emerging & Frontier Income Trust Plc | 0.12 | 1.07 | 0.95 |
| Low | High | |
| Unlevered beta | 0.62 | 1.01 |
| Relevered beta | 0.91 | 1.48 |
| Adjusted relevered beta | 0.94 | 1.32 |
DUKE.L'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 DUKE.L:
cost_of_equity (11.90%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.94) + 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.