ILU.AX WACC - Weighted Average Cost of Capital

The WACC of Iluka Resources Ltd (ILU.AX) is 10.7%.

The Cost of Equity of Iluka Resources Ltd (ILU.AX) is 11.85%.

The Cost of Debt of Iluka Resources Ltd (ILU.AX) is 5.50%.

	Range	Selected
Cost of equity	10.10% - 13.60%	11.85%
Tax rate	28.40% - 29.00%	28.70%
Cost of debt	4.00% - 7.00%	5.50%
WACC	9.1% - 12.3%	10.7%

WACC

ILU.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.2	1.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.10%	13.60%

Tax rate	28.40%	29.00%
Debt/Equity ratio	0.17	0.17
Cost of debt	4.00%	7.00%

After-tax WACC	9.1%	12.3%


Selected WACC	10.7%

ILU.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 ILU.AX:

cost_of_equity (11.85%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.2) + 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.