The WACC of Mitchell Services Ltd (MSV.AX) is 8.7%.
Range | Selected | |
Cost of equity | 9.1% - 12.2% | 10.65% |
Tax rate | 28.9% - 31.0% | 29.95% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 7.3% - 10.1% | 8.7% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.99 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.1% | 12.2% |
Tax rate | 28.9% | 31.0% |
Debt/Equity ratio | 0.39 | 0.39 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 7.3% | 10.1% |
Selected WACC | 8.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MSV.AX | Mitchell Services Ltd | 0.39 | 1.04 | 0.82 |
AZY.AX | Antipa Minerals Ltd | 0 | 1.24 | 1.24 |
BSM.AX | Bass Metals Ltd | 0.29 | 1.6 | 1.34 |
CII.AX | CI Resources Ltd | 0.76 | 0.54 | 0.35 |
IMA.AX | Image Resources NL | 0.13 | 0.77 | 0.71 |
MLX.AX | Metals X Ltd | 0.01 | 0.18 | 0.18 |
MRC.AX | Mineral Commodities Ltd | 0.41 | 0.21 | 0.16 |
MYE.AX | Mastermyne Group Ltd | 0.15 | 1.19 | 1.08 |
RVR.AX | Red River Resources Ltd | 0.18 | 1.7 | 1.51 |
SWK.AX | Swick Mining Services Ltd | 0.31 | 1.15 | 0.94 |
Low | High | |
Unlevered beta | 0.77 | 1 |
Relevered beta | 0.99 | 1.27 |
Adjusted relevered beta | 0.99 | 1.18 |
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 MSV.AX:
cost_of_equity (10.65%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.99) + 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.