FRE.NZ
Freightways Ltd
Price:  
8.55 
NZD
Volume:  
98,926.00
New Zealand | Air Freight & Logistics
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FRE.NZ WACC - Weighted Average Cost of Capital

The WACC of Freightways Ltd (FRE.NZ) is 9.0%.

The Cost of Equity of Freightways Ltd (FRE.NZ) is 11.20%.
The Cost of Debt of Freightways Ltd (FRE.NZ) is 5.50%.

Range Selected
Cost of equity 8.80% - 13.60% 11.20%
Tax rate 28.80% - 30.40% 29.60%
Cost of debt 4.00% - 7.00% 5.50%
WACC 7.0% - 11.0% 9.0%
WACC

FRE.NZ WACC calculation

Category Low High
Long-term bond rate 4.9% 5.4%
Equity market risk premium 5.5% 6.5%
Adjusted beta 0.71 1.18
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.80% 13.60%
Tax rate 28.80% 30.40%
Debt/Equity ratio 0.43 0.43
Cost of debt 4.00% 7.00%
After-tax WACC 7.0% 11.0%
Selected WACC 9.0%

FRE.NZ'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 FRE.NZ:

cost_of_equity (11.20%) = risk_free_rate (5.15%) + equity_risk_premium (6.00%) * adjusted_beta (0.71) + 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.