The WACC of Simble Solutions Ltd (SIS.AX) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.20% | 6.25% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 4.60% - 4.60% | 4.60% |
| WACC | 5.2% - 6.9% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.04 | 0.12 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.30% | 7.20% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.60% | 4.60% |
| After-tax WACC | 5.2% | 6.9% |
| Selected WACC | 6.0% | |
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 SIS.AX:
cost_of_equity (6.25%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (-0.04) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.