TWE.AX WACC - Weighted Average Cost of Capital

The WACC of Treasury Wine Estates Ltd (TWE.AX) is 9.7%.

The Cost of Equity of Treasury Wine Estates Ltd (TWE.AX) is 11.40%.

The Cost of Debt of Treasury Wine Estates Ltd (TWE.AX) is 5.50%.

	Range	Selected
Cost of equity	8.80% - 14.00%	11.40%
Tax rate	29.50% - 29.80%	29.65%
Cost of debt	4.00% - 7.00%	5.50%
WACC	7.4% - 11.9%	9.7%

WACC

TWE.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.94	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.80%	14.00%

Tax rate	29.50%	29.80%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.00%	7.00%

After-tax WACC	7.4%	11.9%


Selected WACC	9.7%

TWE.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 TWE.AX:

cost_of_equity (11.40%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.94) + 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.