MDI.AX WACC - Weighted Average Cost of Capital
The WACC of Middle Island Resources Ltd (MDI.AX) is 6.4%.
| Range | Selected | |
| Cost of equity | 7.0% - 11.7% | 9.35% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.3% - 7.6% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.59 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.0% | 11.7% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.3% | 7.6% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MDI.AX | Middle Island Resources Ltd | 1.16 | 0.45 | 0.25 |
| AGS.AX | Alliance Resources Ltd | 0 | 0.39 | 0.39 |
| AME.AX | Alto Metals Ltd | 0 | -0.19 | -0.19 |
| CTO.AX | Citigold Corporation Ltd | 0.3 | -0.01 | -0.01 |
| ERM.AX | Emmerson Resources Ltd | 0 | 0.76 | 0.76 |
| KAU.AX | Kaiser Reef Ltd | 0.01 | -0.83 | -0.83 |
| MKG.AX | Mako Gold Ltd | 0.01 | 0.91 | 0.9 |
| NAG.AX | Nagambie Resources Ltd | 0.36 | 1.77 | 1.42 |
| NXM.AX | Nexus Minerals Ltd | 0 | 0.61 | 0.61 |
| OAU.AX | Ora Gold Ltd | 0.09 | -0.78 | -0.74 |
| TNR.AX | Torian Resources Ltd | 0.05 | 1.24 | 1.2 |
| Low | High | |
| Unlevered beta | 0.25 | 0.61 |
| Relevered beta | 0.39 | 1.13 |
| Adjusted relevered beta | 0.59 | 1.09 |
MDI.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 MDI.AX:
cost_of_equity (9.35%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.59) + 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.