INV.AX WACC - Weighted Average Cost of Capital
The WACC of Investsmart Group Ltd (INV.AX) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.3% - 8.9% | 7.6% |
| Tax rate | 15.1% - 22.7% | 18.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.2% - 8.8% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.44 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 8.9% |
| Tax rate | 15.1% | 22.7% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.2% | 8.8% |
| Selected WACC | 7.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| INV.AX | Investsmart Group Ltd | 0.03 | 1.87 | 1.83 |
| ASW.AX | Advanced Share Registry Ltd | 0.01 | 0.3 | 0.3 |
| AVC.AX | Auctus Investment Group Ltd | 0.05 | 0.17 | 0.16 |
| CGA.AX | Contango Asset Management Ltd | 0.08 | 1.1 | 1.03 |
| CIW.AX | Clime Investment Management Ltd | 0.02 | 0.13 | 0.12 |
| CVC.AX | CVC Ltd | 0.35 | -0.27 | -0.21 |
| IQ3.AX | Iq3corp Ltd | 0.56 | 0.98 | 0.67 |
| KAM.AX | K2 Asset Management Holdings Ltd | 0 | 1.36 | 1.36 |
| PAC.AX | Pacific Current Group Ltd | 0.18 | 0.19 | 0.16 |
| TIP.AX | Teaminvest Private Group Ltd | 0.44 | -0.34 | -0.25 |
| Low | High | |
| Unlevered beta | 0.16 | 0.45 |
| Relevered beta | 0.16 | 0.46 |
| Adjusted relevered beta | 0.44 | 0.64 |
INV.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 INV.AX:
cost_of_equity (7.60%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.44) + 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.