KAR.AX WACC - Weighted Average Cost of Capital

The WACC of Karoon Energy Ltd (KAR.AX) is 9.4%.

The Cost of Equity of Karoon Energy Ltd (KAR.AX) is 11.55%.

The Cost of Debt of Karoon Energy Ltd (KAR.AX) is 5.50%.

	Range	Selected
Cost of equity	9.60% - 13.50%	11.55%
Tax rate	30.90% - 38.30%	34.60%
Cost of debt	4.00% - 7.00%	5.50%
WACC	7.7% - 11.0%	9.4%

WACC

KAR.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.1	1.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	13.50%

Tax rate	30.90%	38.30%
Debt/Equity ratio	0.38	0.38
Cost of debt	4.00%	7.00%

After-tax WACC	7.7%	11.0%


Selected WACC	9.4%

KAR.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 KAR.AX:

cost_of_equity (11.55%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.1) + 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.