The WACC of Redbubble Ltd (RBL.AX) is 10.6%.
| Range | Selected | |
| Cost of equity | 9.70% - 12.20% | 10.95% |
| Tax rate | 8.20% - 14.30% | 11.25% |
| Cost of debt | 4.00% - 4.90% | 4.45% |
| WACC | 9.4% - 11.8% | 10.6% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 1.01 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.70% | 12.20% |
| Tax rate | 8.20% | 14.30% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.00% | 4.90% |
| After-tax WACC | 9.4% | 11.8% |
| 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 RBL.AX:
cost_of_equity (10.95%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (1.01) + 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.