The WACC of Cameco Corp (CCO.TO) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.20% - 8.40% | 7.30% |
| Tax rate | 22.90% - 38.90% | 30.90% |
| Cost of debt | 4.80% - 5.80% | 5.30% |
| WACC | 6.1% - 8.2% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.6% | 4.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.48 | 0.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 8.40% |
| Tax rate | 22.90% | 38.90% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.80% | 5.80% |
| After-tax WACC | 6.1% | 8.2% |
| Selected WACC | 7.2% | |
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 CCO.TO:
cost_of_equity (7.30%) = risk_free_rate (3.85%) + equity_risk_premium (6.00%) * adjusted_beta (0.48) + 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.