The WACC of Vortiv Ltd (VOR.AX) is 7.2%.
| Range | Selected | |
| Cost of equity | 20.20% - 32.60% | 26.40% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.2% - 8.2% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 2.93 | 4.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.20% | 32.60% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 5.22 | 5.22 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.2% | 8.2% |
| Selected WACC | 7.2% | |
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 VOR.AX:
cost_of_equity (26.40%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (2.93) + 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.