MTS.AX
Metcash Ltd
Price:  
3.27 
AUD
Volume:  
3,639,266.00
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MTS.AX WACC - Weighted Average Cost of Capital

The WACC of Metcash Ltd (MTS.AX) is 7.0%.

The Cost of Equity of Metcash Ltd (MTS.AX) is 8.20%.
The Cost of Debt of Metcash Ltd (MTS.AX) is 5.50%.

Range Selected
Cost of equity 7.00% - 9.40% 8.20%
Tax rate 30.80% - 30.90% 30.85%
Cost of debt 4.00% - 7.00% 5.50%
WACC 5.8% - 8.1% 7.0%
WACC

MTS.AX WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.58 0.72
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 9.40%
Tax rate 30.80% 30.90%
Debt/Equity ratio 0.39 0.39
Cost of debt 4.00% 7.00%
After-tax WACC 5.8% 8.1%
Selected WACC 7.0%

MTS.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 MTS.AX:

cost_of_equity (8.20%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.