WSA.AX WACC - Weighted Average Cost of Capital

The WACC of Western Areas Ltd (WSA.AX) is 9.3%.

The Cost of Equity of Western Areas Ltd (WSA.AX) is 9.35%.

The Cost of Debt of Western Areas Ltd (WSA.AX) is 5.50%.

	Range	Selected
Cost of equity	8.20% - 10.50%	9.35%
Tax rate	26.90% - 28.40%	27.65%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.1% - 10.4%	9.3%

WACC

WSA.AX WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.95	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	10.50%

Tax rate	26.90%	28.40%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.00%	7.00%

After-tax WACC	8.1%	10.4%


Selected WACC	9.3%

WSA.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 WSA.AX:

cost_of_equity (9.35%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (0.95) + 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.