WPL.AX WACC - Weighted Average Cost of Capital

The WACC of Woodside Petroleum Ltd (WPL.AX) is 9.7%.

The Cost of Equity of Woodside Petroleum Ltd (WPL.AX) is 11.95%.

The Cost of Debt of Woodside Petroleum Ltd (WPL.AX) is 4.25%.

	Range	Selected
Cost of equity	10.60% - 13.30%	11.95%
Tax rate	29.40% - 33.20%	31.30%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.6% - 10.8%	9.7%

WACC

WPL.AX WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	4.7%	5.7%
Adjusted beta	1.45	1.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	13.30%

Tax rate	29.40%	33.20%
Debt/Equity ratio	0.33	0.33
Cost of debt	4.00%	4.50%

After-tax WACC	8.6%	10.8%


Selected WACC	9.7%

WPL.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 WPL.AX:

cost_of_equity (11.95%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (1.45) + 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.