GEMD.L
Gem Diamonds Ltd
Price:  
6.6 
GBP
Volume:  
61,338
United Kingdom | Metals & Mining

GEMD.L WACC - Weighted Average Cost of Capital

The WACC of Gem Diamonds Ltd (GEMD.L) is 11.0%.

The Cost of Equity of Gem Diamonds Ltd (GEMD.L) is 16.65%.
The Cost of Debt of Gem Diamonds Ltd (GEMD.L) is 12.1%.

RangeSelected
Cost of equity13.2% - 20.1%16.65%
Tax rate32.0% - 34.8%33.4%
Cost of debt6.2% - 18.0%12.1%
WACC7.3% - 14.6%11.0%
WACC

GEMD.L WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium6.0%7.0%
Adjusted beta1.542.17
Additional risk adjustments0.0%0.5%
Cost of equity13.2%20.1%
Tax rate32.0%34.8%
Debt/Equity ratio
1.881.88
Cost of debt6.2%18.0%
After-tax WACC7.3%14.6%
Selected WACC11.0%

GEMD.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 GEMD.L:

cost_of_equity (16.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.54) + 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.