GAP.AX WACC - Weighted Average Cost of Capital

The WACC of Gale Pacific Ltd (GAP.AX) is 5.6%.

The Cost of Equity of Gale Pacific Ltd (GAP.AX) is 7.25%.

The Cost of Debt of Gale Pacific Ltd (GAP.AX) is 6.85%.

	Range	Selected
Cost of equity	6.40% - 8.10%	7.25%
Tax rate	29.60% - 30.40%	30.00%
Cost of debt	4.40% - 9.30%	6.85%
WACC	4.2% - 7.0%	5.6%

WACC

GAP.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.48	0.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	8.10%

Tax rate	29.60%	30.40%
Debt/Equity ratio	1.97	1.97
Cost of debt	4.40%	9.30%

After-tax WACC	4.2%	7.0%


Selected WACC	5.6%

GAP.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 GAP.AX:

cost_of_equity (7.25%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.48) + 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.