SME.WA WACC - Weighted Average Cost of Capital

The WACC of Simple SA (SME.WA) is 12.9%.

The Cost of Equity of Simple SA (SME.WA) is 13.30%.

The Cost of Debt of Simple SA (SME.WA) is 7.25%.

	Range	Selected
Cost of equity	12.10% - 14.50%	13.30%
Tax rate	7.30% - 13.80%	10.55%
Cost of debt	7.00% - 7.50%	7.25%
WACC	11.7% - 14.0%	12.9%

WACC

SME.WA WACC calculation

Category	Low	High

Long-term bond rate	7.2%	7.7%
Equity market risk premium	5.6%	6.6%
Adjusted beta	0.87	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.10%	14.50%

Tax rate	7.30%	13.80%
Debt/Equity ratio	0.07	0.07
Cost of debt	7.00%	7.50%

After-tax WACC	11.7%	14.0%


Selected WACC	12.9%

SME.WA'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 SME.WA:

cost_of_equity (13.30%) = risk_free_rate (7.45%) + equity_risk_premium (6.10%) * adjusted_beta (0.87) + 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.