FLT.AX WACC - Weighted Average Cost of Capital

The WACC of Flight Centre Travel Group Ltd (FLT.AX) is 9.3%.

The Cost of Equity of Flight Centre Travel Group Ltd (FLT.AX) is 11.75%.

The Cost of Debt of Flight Centre Travel Group Ltd (FLT.AX) is 5.50%.

	Range	Selected
Cost of equity	10.00% - 13.50%	11.75%
Tax rate	30.80% - 34.30%	32.55%
Cost of debt	4.00% - 7.00%	5.50%
WACC	7.8% - 10.8%	9.3%

WACC

FLT.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.17	1.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	13.50%

Tax rate	30.80%	34.30%
Debt/Equity ratio	0.42	0.42
Cost of debt	4.00%	7.00%

After-tax WACC	7.8%	10.8%


Selected WACC	9.3%

FLT.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 FLT.AX:

cost_of_equity (11.75%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.17) + 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.