EOF.AX WACC - Weighted Average Cost of Capital

The WACC of Ecofibre Ltd (EOF.AX) is 4.5%.

The Cost of Equity of Ecofibre Ltd (EOF.AX) is 8.60%.

The Cost of Debt of Ecofibre Ltd (EOF.AX) is 4.60%.

	Range	Selected
Cost of equity	6.60% - 10.60%	8.60%
Tax rate	27.80% - 31.30%	29.55%
Cost of debt	4.00% - 5.20%	4.60%
WACC	3.7% - 5.2%	4.5%

WACC

EOF.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.51	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	10.60%

Tax rate	27.80%	31.30%
Debt/Equity ratio	3.36	3.36
Cost of debt	4.00%	5.20%

After-tax WACC	3.7%	5.2%


Selected WACC	4.5%

EOF.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 EOF.AX:

cost_of_equity (8.60%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.51) + 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.