VAR.AX WACC - Weighted Average Cost of Capital

The WACC of Variscan Mines Ltd (VAR.AX) is 7.0%.

The Cost of Equity of Variscan Mines Ltd (VAR.AX) is 10.75%.

The Cost of Debt of Variscan Mines Ltd (VAR.AX) is 4.60%.

	Range	Selected
Cost of equity	9.00% - 12.50%	10.75%
Tax rate	30.00% - 30.00%	30.00%
Cost of debt	4.60% - 4.60%	4.60%
WACC	6.1% - 7.8%	7.0%

WACC

VAR.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.97	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	12.50%

Tax rate	30.00%	30.00%
Debt/Equity ratio	1	1
Cost of debt	4.60%	4.60%

After-tax WACC	6.1%	7.8%


Selected WACC	7.0%

VAR.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 VAR.AX:

cost_of_equity (10.75%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.97) + 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.