The WACC of Redan SA (RDN.WA) is 6.8%.
| Range | Selected | |
| Cost of equity | 22.00% - 47.00% | 34.50% |
| Tax rate | 19.00% - 19.00% | 19.00% |
| Cost of debt | 5.10% - 7.00% | 6.05% |
| WACC | 5.3% - 8.4% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 2.59 | 5.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.00% | 47.00% |
| Tax rate | 19.00% | 19.00% |
| Debt/Equity ratio | 14.41 | 14.41 |
| Cost of debt | 5.10% | 7.00% |
| After-tax WACC | 5.3% | 8.4% |
| Selected WACC | 6.8% | |
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 RDN.WA:
cost_of_equity (34.50%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (2.59) + 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.