The WACC of Webcentral Group Ltd (WCG.AX) is 9.7%.
| Range | Selected | |
| Cost of equity | 7.10% - 10.40% | 8.75% |
| Tax rate | 2.90% - 7.30% | 5.10% |
| Cost of debt | 4.00% - 20.10% | 12.05% |
| WACC | 5.9% - 13.6% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 4.1% | 4.6% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.55 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 10.40% |
| Tax rate | 2.90% | 7.30% |
| Debt/Equity ratio | 0.62 | 0.62 |
| Cost of debt | 4.00% | 20.10% |
| After-tax WACC | 5.9% | 13.6% |
| Selected WACC | 9.7% | |
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 WCG.AX:
cost_of_equity (8.75%) = risk_free_rate (4.35%) + equity_risk_premium (6.00%) * adjusted_beta (0.55) + 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.