The WACC of Kingsrose Mining Ltd (KRM.AX) is 9.2%.
Range | Selected | |
Cost of equity | 6.6% - 11.9% | 9.25% |
Tax rate | 6.4% - 8.1% | 7.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.6% - 11.9% | 9.2% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.5 | 1.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.6% | 11.9% |
Tax rate | 6.4% | 8.1% |
Debt/Equity ratio | 0 | 0 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.6% | 11.9% |
Selected WACC | 9.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
KRM.AX | Kingsrose Mining Ltd | 0 | -0.2 | -0.2 |
AAU.AX | Antilles Gold Ltd | 0.01 | -0.23 | -0.23 |
BCN.AX | Beacon Minerals Ltd | 0.08 | 0.07 | 0.07 |
DGR.AX | DGR Global Ltd | 1.65 | 0.01 | 0 |
LNY.AX | Laneway Resources Ltd | 0.41 | 1.87 | 1.36 |
MAT.AX | Matsa Resources Ltd | 0.12 | 1.12 | 1.01 |
NAG.AX | Nagambie Resources Ltd | 0.38 | 1.95 | 1.45 |
NXM.AX | Nexus Minerals Ltd | 0 | 0.38 | 0.38 |
STN.AX | Saturn Metals Ltd | 0 | 1.71 | 1.71 |
TTM.AX | Titan Minerals Ltd | 0.02 | 1.87 | 1.84 |
Low | High | |
Unlevered beta | 0.26 | 1.15 |
Relevered beta | 0.25 | 1.19 |
Adjusted relevered beta | 0.5 | 1.13 |
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 KRM.AX:
cost_of_equity (9.25%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.