GOW.AX WACC - Weighted Average Cost of Capital

The WACC of Gowing Bros Ltd (GOW.AX) is 6.8%.

The Cost of Equity of Gowing Bros Ltd (GOW.AX) is 6.70%.

The Cost of Debt of Gowing Bros Ltd (GOW.AX) is 9.90%.

	Range	Selected
Cost of equity	5.90% - 7.50%	6.70%
Tax rate	22.80% - 32.30%	27.55%
Cost of debt	4.00% - 15.80%	9.90%
WACC	4.6% - 9.0%	6.8%

WACC

GOW.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.36	0.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	7.50%

Tax rate	22.80%	32.30%
Debt/Equity ratio	0.82	0.82
Cost of debt	4.00%	15.80%

After-tax WACC	4.6%	9.0%


Selected WACC	6.8%

GOW.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 GOW.AX:

cost_of_equity (6.70%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.36) + 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.