AMA.AX WACC - Weighted Average Cost of Capital

The WACC of AMA Group Ltd (AMA.AX) is 7.9%.

The Cost of Equity of AMA Group Ltd (AMA.AX) is 13.55%.

The Cost of Debt of AMA Group Ltd (AMA.AX) is 5.50%.

	Range	Selected
Cost of equity	9.70% - 17.40%	13.55%
Tax rate	14.80% - 24.60%	19.70%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.8% - 10.0%	7.9%

WACC

AMA.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.1	2.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	17.40%

Tax rate	14.80%	24.60%
Debt/Equity ratio	1.6	1.6
Cost of debt	4.00%	7.00%

After-tax WACC	5.8%	10.0%


Selected WACC	7.9%

AMA.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 AMA.AX:

cost_of_equity (13.55%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.1) + 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.