The WACC of Volt Resources Ltd (VRC.AX) is 8.1%.
Range | Selected | |
Cost of equity | 7.0% - 9.2% | 8.1% |
Tax rate | 30.0% - 30.0% | 30% |
Cost of debt | 4.6% - 4.6% | 4.6% |
WACC | 7.0% - 9.2% | 8.1% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.59 | 0.69 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.0% | 9.2% |
Tax rate | 30.0% | 30.0% |
Debt/Equity ratio | 0.01 | 0.01 |
Cost of debt | 4.6% | 4.6% |
After-tax WACC | 7.0% | 9.2% |
Selected WACC | 8.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
VRC.AX | Volt Resources Ltd | 0.01 | 1.11 | 1.1 |
AUR.AX | Auris Minerals Ltd | 0.01 | 0.52 | 0.52 |
CST.AX | Castile Resources Ltd | 0 | 0.55 | 0.54 |
DME.AX | Dome Gold Mines Ltd | 0.01 | -0.52 | -0.52 |
ELT.AX | Elementos Ltd | 0.03 | 0.06 | 0.06 |
IPT.AX | Impact Minerals Ltd | 0.02 | 1.4 | 1.39 |
KAI.AX | Kairos Minerals Ltd | 0 | 1.23 | 1.23 |
S2R.AX | S2 Resources Ltd | 0 | -0.59 | -0.59 |
SKY.AX | Sky Metals Ltd | 0.01 | 0.21 | 0.21 |
WRM.AX | White Rock Minerals Ltd | 0.03 | 0.51 | 0.5 |
Low | High | |
Unlevered beta | 0.38 | 0.53 |
Relevered beta | 0.39 | 0.54 |
Adjusted relevered beta | 0.59 | 0.69 |
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 VRC.AX:
cost_of_equity (8.10%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.59) + 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.