The WACC of Livetiles Ltd (LVT.AX) is 6.9%.
| Range | Selected | |
| Cost of equity | 9.90% - 12.70% | 11.30% |
| Tax rate | 1.20% - 1.60% | 1.40% |
| Cost of debt | 4.00% - 4.90% | 4.45% |
| WACC | 6.1% - 7.7% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.14 | 1.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.90% | 12.70% |
| Tax rate | 1.20% | 1.60% |
| Debt/Equity ratio | 1.76 | 1.76 |
| Cost of debt | 4.00% | 4.90% |
| After-tax WACC | 6.1% | 7.7% |
| Selected WACC | 6.9% | |
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 LVT.AX:
cost_of_equity (11.30%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.14) + 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.