S2R.AX WACC - Weighted Average Cost of Capital
The WACC of S2 Resources Ltd (S2R.AX) is 7.9%.
| Range | Selected | |
| Cost of equity | 6.6% - 9.3% | 7.95% |
| Tax rate | 30.0% - 30.0% | 30% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.5% - 9.3% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.5 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.6% | 9.3% |
| Tax rate | 30.0% | 30.0% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.5% | 9.3% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| S2R.AX | S2 Resources Ltd | 0 | -0.59 | -0.59 |
| AUR.AX | Auris Minerals Ltd | 0.01 | 0.52 | 0.52 |
| DME.AX | Dome Gold Mines Ltd | 0.01 | -0.52 | -0.52 |
| EQR.AX | EQ Resources Ltd | 0.47 | 0.28 | 0.21 |
| KRR.AX | King River Resources Ltd | 0.01 | 0.28 | 0.28 |
| MZZ.AX | Matador Mining Ltd | 0 | 0.67 | 0.67 |
| REE.AX | Rarex Ltd | 0 | 1.42 | 1.42 |
| TAS.AX | Tasman Resources Ltd | 6.25 | -1.88 | -0.35 |
| TON.AX | Triton Minerals Ltd | 0.02 | 1.84 | 1.81 |
| WKT.AX | Walkabout Resources Ltd | 0.49 | 0.84 | 0.63 |
| Low | High | |
| Unlevered beta | 0.25 | 0.56 |
| Relevered beta | 0.25 | 0.57 |
| Adjusted relevered beta | 0.5 | 0.71 |
S2R.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 S2R.AX:
cost_of_equity (7.95%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.