RHI.AX WACC - Weighted Average Cost of Capital
The WACC of Red Hill Iron Ltd (RHI.AX) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.5% | 8.3% |
| Tax rate | 1.8% - 10.4% | 6.1% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 7.1% - 9.5% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.6 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.5% |
| Tax rate | 1.8% | 10.4% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 7.1% | 9.5% |
| Selected WACC | 8.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RHI.AX | Red Hill Iron Ltd | 0 | 0.81 | 0.81 |
| ACS.AX | Accent Resources NL | 4.56 | 0.7 | 0.13 |
| AHQ.AX | Allegiance Coal Ltd | 6.4 | 0.24 | 0.03 |
| BCB.AX | Bowen Coking Coal Ltd | 4.07 | 1.89 | 0.38 |
| ELE.AX | Elmore Ltd | 6.75 | 1.75 | 0.23 |
| FEX.AX | Fenix Resources Ltd | 0.2 | 1.05 | 0.89 |
| FMS.AX | Flinders Mines Ltd | 0.01 | 0.6 | 0.59 |
| IRD.AX | Iron Road Ltd | 0.03 | 0.63 | 0.61 |
| MGT.AX | Magnetite Mines Ltd | 0.01 | 0.84 | 0.83 |
| PDZ.AX | Prairie Mining Ltd | 0 | 0.43 | 0.43 |
| Low | High | |
| Unlevered beta | 0.41 | 0.6 |
| Relevered beta | 0.4 | 0.6 |
| Adjusted relevered beta | 0.6 | 0.73 |
RHI.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 RHI.AX:
cost_of_equity (8.30%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.6) + 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.