The WACC of OceanaGold Corp (OGC.AX) is 10.6%.
| Range | Selected | |
| Cost of equity | 10.20% - 13.40% | 11.80% |
| Tax rate | 18.60% - 34.10% | 26.35% |
| Cost of debt | 4.00% - 4.90% | 4.45% |
| WACC | 9.3% - 12.0% | 10.6% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.22 | 1.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 13.40% |
| Tax rate | 18.60% | 34.10% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 4.00% | 4.90% |
| After-tax WACC | 9.3% | 12.0% |
| Selected WACC | 10.6% | |
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 OGC.AX:
cost_of_equity (11.80%) = risk_free_rate (4.35%) + equity_risk_premium (5.50%) * adjusted_beta (1.22) + 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.