WOW.AX
Woolworths Group Ltd
Price:  
32.54 
AUD
Volume:  
2,151,424.00
Australia | Food & Staples Retailing
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WOW.AX WACC - Weighted Average Cost of Capital

The WACC of Woolworths Group Ltd (WOW.AX) is 6.2%.

The Cost of Equity of Woolworths Group Ltd (WOW.AX) is 7.20%.
The Cost of Debt of Woolworths Group Ltd (WOW.AX) is 5.50%.

Range Selected
Cost of equity 6.20% - 8.20% 7.20%
Tax rate 28.80% - 29.80% 29.30%
Cost of debt 4.00% - 7.00% 5.50%
WACC 5.2% - 7.2% 6.2%
WACC

WOW.AX WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.43 0.52
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.20% 8.20%
Tax rate 28.80% 29.80%
Debt/Equity ratio 0.42 0.42
Cost of debt 4.00% 7.00%
After-tax WACC 5.2% 7.2%
Selected WACC 6.2%

WOW.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 WOW.AX:

cost_of_equity (7.20%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.43) + 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.