The WACC of Zebit Inc (ZBT.AX) is 9.4%.
| Range | Selected | |
| Cost of equity | 15.80% - 22.80% | 19.30% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 6.50% - 7.00% | 6.75% |
| WACC | 8.5% - 10.3% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 2.57 | 3.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.80% | 22.80% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 3.73 | 3.73 |
| Cost of debt | 6.50% | 7.00% |
| After-tax WACC | 8.5% | 10.3% |
| Selected WACC | 9.4% | |
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 ZBT.AX:
cost_of_equity (19.30%) = risk_free_rate (3.95%) + equity_risk_premium (5.20%) * adjusted_beta (2.57) + 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.