NZO.NZ WACC - Weighted Average Cost of Capital
The WACC of New Zealand Oil and Gas Ltd (NZO.NZ) is 7.1%.
| Range | Selected | |
| Cost of equity | 6.9% - 14.3% | 10.6% |
| Tax rate | 28.0% - 28.0% | 28% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.2% - 8.9% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.5 | 1.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 14.3% |
| Tax rate | 28.0% | 28.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.2% | 8.9% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NZO.NZ | New Zealand Oil and Gas Ltd | 1.2 | 0.27 | 0.14 |
| 353.HK | Energy International Investments Holdings Ltd | 1.07 | -0.05 | -0.03 |
| 5GI.SI | Interra Resources Ltd | 0.01 | 0.11 | 0.1 |
| 8270.HK | China CBM Group Co Ltd | 0.25 | 0.05 | 0.04 |
| AJQ.AX | Armour Energy Ltd | 3.44 | -1.75 | -0.5 |
| ATS.AX | Australis Oil & Gas Ltd | 1.26 | 0.22 | 0.11 |
| CUE.AX | Cue Energy Resources Ltd | 0 | 0.76 | 0.76 |
| IVZ.AX | Invictus Energy Ltd | 0 | 1.44 | 1.44 |
| KKO.AX | Kinetiko Energy Ltd | 0.02 | 0.38 | 0.38 |
| SELAN.NS | Selan Exploration Technology Ltd | 0 | 2 | 1.99 |
| WEL.AX | Winchester Energy Ltd | 0.04 | -0.82 | -0.8 |
| Low | High | |
| Unlevered beta | 0.1 | 0.14 |
| Relevered beta | 0.25 | 1.7 |
| Adjusted relevered beta | 0.5 | 1.47 |
NZO.NZ'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 NZO.NZ:
cost_of_equity (10.60%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.