The WACC of SITO Mobile Ltd (SITOQ) is 30.7%.
| Range | Selected | |
| Cost of equity | 5.40% - 7.60% | 6.50% |
| Tax rate | 3.00% - 14.10% | 8.55% |
| Cost of debt | 7.00% - 185.10% | 96.05% |
| WACC | 5.9% - 55.6% | 30.7% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 0.25 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.40% | 7.60% |
| Tax rate | 3.00% | 14.10% |
| Debt/Equity ratio | 0.46 | 0.46 |
| Cost of debt | 7.00% | 185.10% |
| After-tax WACC | 5.9% | 55.6% |
| Selected WACC | 30.7% | |
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 SITOQ:
cost_of_equity (6.50%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.25) + 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.