ARX.TO
ARC Resources Ltd
Price:  
25.81 
CAD
Volume:  
453,794.00
Canada | Oil, Gas & Consumable Fuels
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ARX.TO WACC - Weighted Average Cost of Capital

The WACC of ARC Resources Ltd (ARX.TO) is 7.9%.

The Cost of Equity of ARC Resources Ltd (ARX.TO) is 8.45%.
The Cost of Debt of ARC Resources Ltd (ARX.TO) is 5.65%.

Range Selected
Cost of equity 7.20% - 9.70% 8.45%
Tax rate 22.60% - 22.70% 22.65%
Cost of debt 4.00% - 7.30% 5.65%
WACC 6.7% - 9.2% 7.9%
WACC

ARX.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.8 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.20% 9.70%
Tax rate 22.60% 22.70%
Debt/Equity ratio 0.16 0.16
Cost of debt 4.00% 7.30%
After-tax WACC 6.7% 9.2%
Selected WACC 7.9%

ARX.TO'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 ARX.TO:

cost_of_equity (8.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.8) + 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.