The WACC of Sultan Resources Ltd (SLZ.AX) is 8.2%.
Range | Selected | |
Cost of equity | 10.5% - 15.2% | 12.85% |
Tax rate | 30.0% - 30.0% | 30% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.0% - 9.4% | 8.2% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 1.27 | 1.67 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.5% | 15.2% |
Tax rate | 30.0% | 30.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.0% | 9.4% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SLZ.AX | Sultan Resources Ltd | 1.13 | 2.31 | 1.29 |
BAR.AX | Barra Resources Ltd | 0 | 1.25 | 1.25 |
CAE.AX | Cannindah Resources Ltd | 0 | 0.75 | 0.74 |
ENT.AX | Enterprise Metals Ltd | 0.01 | 1.25 | 1.24 |
LSR.AX | Lodestar Minerals Ltd | 0.19 | 1.35 | 1.19 |
MLM.AX | Metallica Minerals Ltd | 0.01 | 0.62 | 0.62 |
PNN.AX | Pepinnini Minerals Ltd | 0.16 | 1.26 | 1.13 |
RBR.AX | RBR Group Ltd | 0.61 | -0.63 | -0.44 |
RMX.AX | Red Mountain Mining Ltd | 0.02 | 0.66 | 0.64 |
SRZ.AX | Stellar Resources Ltd | 0 | 1.6 | 1.6 |
Low | High | |
Unlevered beta | 0.98 | 1.21 |
Relevered beta | 1.4 | 2 |
Adjusted relevered beta | 1.27 | 1.67 |
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 SLZ.AX:
cost_of_equity (12.85%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.27) + 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.