TER.AX WACC - Weighted Average Cost of Capital
The WACC of Terracom Ltd (TER.AX) is 11.6%.
| Range | Selected | |
| Cost of equity | 10.4% - 13.5% | 11.95% |
| Tax rate | 26.3% - 27.9% | 27.1% |
| Cost of debt | 4.0% - 15.8% | 9.9% |
| WACC | 9.8% - 13.4% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.26 | 1.39 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.4% | 13.5% |
| Tax rate | 26.3% | 27.9% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.0% | 15.8% |
| After-tax WACC | 9.8% | 13.4% |
| Selected WACC | 11.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TER.AX | Terracom Ltd | 0.09 | 1.71 | 1.61 |
| AEE.AX | Aura Energy Ltd | 0.01 | 1.69 | 1.68 |
| AGE.AX | Alligator Energy Ltd | 0 | 2.01 | 2.01 |
| CXU.AX | Cauldron Energy Ltd | 0.01 | 1.5 | 1.49 |
| DEV.AX | DevEx Resources Ltd | 0.01 | 1.5 | 1.49 |
| ERA.AX | Energy Resources Of Australia Ltd | 0 | 1.24 | 1.24 |
| MCM.AX | MC Mining Ltd | 0.59 | 1.05 | 0.73 |
| PEN.AX | Peninsula Energy Ltd | 0 | 1.3 | 1.3 |
| SMR.AX | Stanmore Coal Ltd | 0.36 | 1.65 | 1.31 |
| WEC.AX | White Energy Company Ltd | 2.97 | -0.17 | -0.05 |
| Low | High | |
| Unlevered beta | 1.3 | 1.49 |
| Relevered beta | 1.39 | 1.58 |
| Adjusted relevered beta | 1.26 | 1.39 |
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 (11.95%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.26) + 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.