GXY.AX WACC - Weighted Average Cost of Capital
The WACC of Galaxy Resources Ltd (GXY.AX) is 9.6%.
| Range | Selected | |
| Cost of equity | 8.3% - 11.0% | 9.65% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.2% - 10.9% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.97 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 11.0% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.2% | 10.9% |
| Selected WACC | 9.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GXY.AX | Galaxy Resources Ltd | 0.01 | 1.28 | 1.27 |
| AVZ.AX | AVZ Minerals Ltd | 0 | 1.14 | 1.14 |
| CMM.AX | Capricorn Metals Ltd | 0.02 | 0.28 | 0.28 |
| IMD.AX | Imdex Ltd | 0.09 | 0.99 | 0.92 |
| LEG.AX | Legend Mining Ltd | 0 | 0.86 | 0.86 |
| MCR.AX | Mincor Resources NL | 0.04 | 1.01 | 0.99 |
| MRC.AX | Mineral Commodities Ltd | 0.41 | 0.21 | 0.16 |
| ORE.AX | Orocobre Ltd | 0.08 | 1.64 | 1.55 |
| PLL.AX | Piedmont Lithium Ltd | 0 | 0.58 | 0.58 |
| WSA.AX | Western Areas Ltd | 0.02 | 0.96 | 0.95 |
| Low | High | |
| Unlevered beta | 0.9 | 0.96 |
| Relevered beta | 0.96 | 1.16 |
| Adjusted relevered beta | 0.97 | 1.11 |
GXY.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 GXY.AX:
cost_of_equity (9.65%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (0.97) + 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.