Information Sources
Our industry sector classifications are as defined by the NZSE. Industry sector averages for WACC are the market capitalisation weighted averages for those companies currently selected within each sector.
In calculating the WACCs and historical earnings multiples for each of the companies surveyed, we use information provided by DATEX Services Limited and Database Services.
Technical Note
Our WACC estimates are prepared using a post-investor taxes specification of the Capital Asset Pricing Model (CAPM) to determine the cost of equity. The cost of equity capital for each company has been derived solely from share trading in the New Zealand Stock Exchange (NZSE) and has not been 'blended' with the cost of equity capital for similar companies listed on overseas stock exchanges. Risk Free Rate (Rf) is based on five year government stock yields.
Our Market Risk Premium (MRP) is based on research undertaken on returns in the New Zealand equity market. We have recently completed a revision of our MRP estimate, which is discussed in detail in our
NZ Market Risk Premium paper.
Equity beta estimates are based on an average of monthly returns over (up to) five years, blended with weekly based estimates where less than three years of data is available. The beta estimates incorporate no adjustments to historical betas as measured.
The industry sectors are as defined by the NZSE. Industry sector averages for WACC are the market capitalisation weighted averages for those companies currently selected
within each sector.
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