The WACC of General Capital Ltd (GEN.NZ) is 5.6%.
| Range | Selected | |
| Cost of equity | 14.00% - 20.60% | 17.30% |
| Tax rate | 30.80% - 32.10% | 31.45% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.3% - 6.9% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.91 | 2.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.00% | 20.60% |
| Tax rate | 30.80% | 32.10% |
| Debt/Equity ratio | 6.26 | 6.26 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.3% | 6.9% |
| Selected WACC | 5.6% | |
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 GEN.NZ:
cost_of_equity (17.30%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (1.91) + 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.