The WACC of Avrupa Minerals Ltd (AVU.V) is 7.2%.
Range | Selected | |
Cost of equity | 6.2% - 15.4% | 10.8% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.0% - 9.5% | 7.2% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.46 | 1.73 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.2% | 15.4% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.0% | 9.5% |
Selected WACC | 7.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
AVU.V | Avrupa Minerals Ltd | 0.96 | 1.57 | 0.92 |
BDGC.V | Boundary Gold and Copper Mining Ltd | 0.04 | 1.63 | 1.58 |
BMIN | Britannia Mining Inc | 0.01 | 0.58 | 0.58 |
CDC.V | Cadillac Ventures Inc | 0.23 | 1.59 | 1.36 |
GCC.V | Golden Cariboo Resources Ltd | 0 | 1.49 | 1.49 |
JZR.V | Jazz Resources Inc | 0.06 | -0.58 | -0.55 |
SUPR.V | Supernova Metals Corp | 0.02 | 1.55 | 1.52 |
SXL.V | Slam Exploration Ltd | 0.01 | -1.21 | -1.2 |
TRS.V | Tres-Or Resources Ltd | 0.01 | -0.75 | -0.74 |
Low | High | |
Unlevered beta | 0.65 | 1.27 |
Relevered beta | 0.19 | 2.09 |
Adjusted relevered beta | 0.46 | 1.73 |
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 AVU.V:
cost_of_equity (10.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.