The WACC of Aris Gold Corp (ARIS.TO) is 8.9%.
Range | Selected | |
Cost of equity | 9.60% - 13.80% | 11.70% |
Tax rate | 25.90% - 26.50% | 26.20% |
Cost of debt | 4.00% - 6.80% | 5.40% |
WACC | 7.2% - 10.6% | 8.9% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 1.26 | 1.58 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.60% | 13.80% |
Tax rate | 25.90% | 26.50% |
Debt/Equity ratio | 0.57 | 0.57 |
Cost of debt | 4.00% | 6.80% |
After-tax WACC | 7.2% | 10.6% |
Selected WACC | 8.9% | |
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 ARIS.TO:
cost_of_equity (11.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.26) + 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.