SMI.AX
Santana Minerals Ltd
Price:  
0.55 
AUD
Volume:  
2,876,672
Australia | Metals & Mining

SMI.AX WACC - Weighted Average Cost of Capital

The WACC of Santana Minerals Ltd (SMI.AX) is 8.1%.

The Cost of Equity of Santana Minerals Ltd (SMI.AX) is 8.15%.
The Cost of Debt of Santana Minerals Ltd (SMI.AX) is 5%.

RangeSelected
Cost of equity6.8% - 9.5%8.15%
Tax rate30.0% - 30.0%30%
Cost of debt5.0% - 5.0%5%
WACC6.8% - 9.5%8.1%
WACC

SMI.AX WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium5.1%6.1%
Adjusted beta0.540.73
Additional risk adjustments0.0%0.5%
Cost of equity6.8%9.5%
Tax rate30.0%30.0%
Debt/Equity ratio
00
Cost of debt5.0%5.0%
After-tax WACC6.8%9.5%
Selected WACC8.1%

SMI.AX WACC - Detailed calculations of Beta

LowHigh
Unlevered beta0.310.6
Relevered beta0.310.6
Adjusted relevered beta0.540.73

SMI.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 SMI.AX:

cost_of_equity (8.15%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.54) + 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.