LPP.WA WACC - Weighted Average Cost of Capital

The WACC of LPP SA (LPP.WA) is 10.2%.

The Cost of Equity of LPP SA (LPP.WA) is 12.15%.

The Cost of Debt of LPP SA (LPP.WA) is 5.10%.

	Range	Selected
Cost of equity	10.80% - 13.50%	12.15%
Tax rate	21.90% - 22.50%	22.20%
Cost of debt	4.00% - 6.20%	5.10%
WACC	9.0% - 11.4%	10.2%

WACC

LPP.WA WACC calculation

Category	Low	High

Long-term bond rate	5.5%	6.0%
Equity market risk premium	6.3%	7.3%
Adjusted beta	0.84	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	13.50%

Tax rate	21.90%	22.50%
Debt/Equity ratio	0.31	0.31
Cost of debt	4.00%	6.20%

After-tax WACC	9.0%	11.4%


Selected WACC	10.2%

LPP.WA'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 LPP.WA:

cost_of_equity (12.15%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.84) + 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.