SMR.AX WACC - Weighted Average Cost of Capital

The WACC of Stanmore Coal Ltd (SMR.AX) is 10.4%.

The Cost of Equity of Stanmore Coal Ltd (SMR.AX) is 12.90%.

The Cost of Debt of Stanmore Coal Ltd (SMR.AX) is 5.50%.

	Range	Selected
Cost of equity	11.40% - 14.40%	12.90%
Tax rate	28.10% - 29.30%	28.70%
Cost of debt	4.00% - 7.00%	5.50%
WACC	9.0% - 11.8%	10.4%

WACC

SMR.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.46	1.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	14.40%

Tax rate	28.10%	29.30%
Debt/Equity ratio	0.39	0.39
Cost of debt	4.00%	7.00%

After-tax WACC	9.0%	11.8%


Selected WACC	10.4%

SMR.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 SMR.AX:

cost_of_equity (12.90%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.46) + 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.