LCE.AX WACC - Weighted Average Cost of Capital
The WACC of London City Equities Ltd (LCE.AX) is 5.5%.
| Range | Selected | |
| Cost of equity | 6.4% - 8.4% | 7.4% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 6.0% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.47 | 0.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.4% | 8.4% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 6.0% |
| Selected WACC | 5.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LCE.AX | London City Equities Ltd | 1.18 | 0.03 | 0.02 |
| 310.HK | Prosperity Investment Holdings Ltd | 0.67 | 0.01 | 0.01 |
| AMP.AX | AMP Ltd | 8.76 | 1.5 | 0.21 |
| CREST.NS | Crest Ventures Ltd | 0.2 | 1.95 | 1.71 |
| CVW.AX | Clearview Wealth Ltd | 0.37 | -0.57 | -0.46 |
| GOW.AX | Gowing Bros Ltd | 0.84 | 0.3 | 0.19 |
| LAW.AX | Lawfinance Ltd | 45.36 | 1.68 | 0.05 |
| MPR.AX | Mpower Group Ltd | 7.07 | 0.68 | 0.12 |
| P15.SI | Pacific Century Regional Developments Ltd | 0.2 | 0.14 | 0.13 |
| PNC.AX | Pioneer Credit Ltd | 3.82 | 1.56 | 0.42 |
| WTL.AX | Wt Financial Group Ltd | 0.19 | 1.38 | 1.22 |
| Low | High | |
| Unlevered beta | 0.12 | 0.19 |
| Relevered beta | 0.21 | 0.34 |
| Adjusted relevered beta | 0.47 | 0.56 |
LCE.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 LCE.AX:
cost_of_equity (7.40%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.