The WACC of Japara Healthcare Ltd (JHC.AX) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.50% - 11.10% | 9.30% |
| Tax rate | 24.30% - 27.80% | 26.05% |
| Cost of debt | 4.00% - 13.10% | 8.55% |
| WACC | 5.5% - 10.4% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.81 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.50% | 11.10% |
| Tax rate | 24.30% | 27.80% |
| Debt/Equity ratio | 0.77 | 0.77 |
| Cost of debt | 4.00% | 13.10% |
| After-tax WACC | 5.5% | 10.4% |
| Selected WACC | 8.0% | |
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 JHC.AX:
cost_of_equity (9.30%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (0.81) + 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.