PPT.AX WACC - Weighted Average Cost of Capital
The WACC of Perpetual Ltd (PPT.AX) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.4% - 10.6% | 8.5% |
| Tax rate | 28.3% - 29.7% | 29% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.4% - 9.0% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.46 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.4% | 10.6% |
| Tax rate | 28.3% | 29.7% |
| Debt/Equity ratio | 0.4 | 0.4 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.4% | 9.0% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PPT.AX | Perpetual Ltd | 0.4 | 1.29 | 1.01 |
| AEF.AX | Australian Ethical Investment Ltd | 0 | 0.17 | 0.17 |
| CAF.AX | Centrepoint Alliance Ltd | 0.08 | 0.11 | 0.1 |
| CIW.AX | Clime Investment Management Ltd | 0.02 | 0.13 | 0.13 |
| CVC.AX | CVC Ltd | 0.35 | -0.27 | -0.22 |
| EQT.AX | EQT Holdings Ltd | 0.1 | 0.89 | 0.84 |
| NGI.AX | Navigator Global Investments Ltd | 0.04 | 0.61 | 0.59 |
| PDL.AX | Pendal Group Ltd | 0.05 | 1.56 | 1.5 |
| PTM.AX | Platinum Asset Management Ltd | 0.04 | 1.51 | 1.47 |
| TIP.AX | Teaminvest Private Group Ltd | 0.44 | -0.31 | -0.24 |
| Low | High | |
| Unlevered beta | 0.15 | 0.69 |
| Relevered beta | 0.19 | 0.88 |
| Adjusted relevered beta | 0.46 | 0.92 |
PPT.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 PPT.AX:
cost_of_equity (8.50%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.