The WACC of Mineral Resources Ltd (MIN.AX) is 10.9%.
Range | Selected | |
Cost of equity | 8.9% - 15.4% | 12.15% |
Tax rate | 28.9% - 29.7% | 29.3% |
Cost of debt | 4.0% - 24.0% | 14% |
WACC | 5.5% - 16.3% | 10.9% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.95 | 1.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.9% | 15.4% |
Tax rate | 28.9% | 29.7% |
Debt/Equity ratio | 1.28 | 1.28 |
Cost of debt | 4.0% | 24.0% |
After-tax WACC | 5.5% | 16.3% |
Selected WACC | 10.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MIN.AX | Mineral Resources Ltd | 1.28 | 3.19 | 1.67 |
CMM.AX | Capricorn Metals Ltd | 0.02 | 0.36 | 0.36 |
IGO.AX | IGO Ltd | 0.02 | 1.73 | 1.72 |
ILU.AX | Iluka Resources Ltd | 0.18 | 1.5 | 1.33 |
MAH.AX | Macmahon Holdings Ltd | 0.55 | 1.26 | 0.91 |
MLX.AX | Metals X Ltd | 0.01 | 0.18 | 0.18 |
MRC.AX | Mineral Commodities Ltd | 0.41 | 0.21 | 0.16 |
NIC.AX | Nickel Mines Ltd | 0.51 | 2.02 | 1.48 |
PAN.AX | Panoramic Resources Ltd | 0.87 | -0.21 | -0.13 |
PLS.AX | Pilbara Minerals Ltd | 0.13 | 1.81 | 1.66 |
PRN.AX | Perenti Global Ltd | 0.63 | 0.83 | 0.57 |
Low | High | |
Unlevered beta | 0.57 | 1.33 |
Relevered beta | 0.93 | 2.06 |
Adjusted relevered beta | 0.95 | 1.71 |
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 MIN.AX:
cost_of_equity (12.15%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.95) + 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.