RDH.AX WACC - Weighted Average Cost of Capital
The WACC of Redhill Education Ltd (RDH.AX) is 7.7%.
| Range | Selected | |
| Cost of equity | 7.7% - 10.4% | 9.05% |
| Tax rate | 22.7% - 26.9% | 24.8% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.7% - 8.7% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.85 | 1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.7% | 10.4% |
| Tax rate | 22.7% | 26.9% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.7% | 8.7% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RDH.AX | Redhill Education Ltd | 0.34 | 1.22 | 0.97 |
| 1752.HK | Top Education Group Ltd | 0.55 | -0.38 | -0.27 |
| 2464.T | Business Breakthrough Inc | 0.02 | 0.15 | 0.15 |
| 4720.T | Johnan Academic Preparatory Institute Inc | 0.63 | 0.2 | 0.14 |
| AKG.AX | Academies Australasia Group Ltd | 2.68 | 0.28 | 0.09 |
| ICT.AX | iCollege Ltd | 0.16 | -0.28 | -0.25 |
| IEL.AX | IDP Education Ltd | 0.11 | 1 | 0.93 |
| KME.AX | Kip McGrath Education Centres Ltd | 0.15 | 0.7 | 0.63 |
| SIT.AX | Site Group International Ltd | 0.41 | 1.14 | 0.87 |
| UCW.AX | UCW Ltd | 0.73 | 1.04 | 0.67 |
| Low | High | |
| Unlevered beta | 0.14 | 0.64 |
| Relevered beta | 0.78 | 1 |
| Adjusted relevered beta | 0.85 | 1 |
RDH.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 RDH.AX:
cost_of_equity (9.05%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (0.85) + 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.