TER.AX WACC - Weighted Average Cost of Capital

The WACC of Terracom Ltd (TER.AX) is 11.2%.

The Cost of Equity of Terracom Ltd (TER.AX) is 11.50%.

The Cost of Debt of Terracom Ltd (TER.AX) is 9.90%.

	Range	Selected
Cost of equity	10.30% - 12.70%	11.50%
Tax rate	26.30% - 27.90%	27.10%
Cost of debt	4.00% - 15.80%	9.90%
WACC	9.7% - 12.6%	11.2%

WACC

TER.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.24	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	12.70%

Tax rate	26.30%	27.90%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	15.80%

After-tax WACC	9.7%	12.6%


Selected WACC	11.2%

TER.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 TER.AX:

cost_of_equity (11.50%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.24) + 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.