The WACC of Crown Point Energy Inc (CWV.V) is 8.5%.
| Range | Selected | |
| Cost of equity | 5.30% - 9.40% | 7.35% |
| Tax rate | 15.60% - 20.50% | 18.05% |
| Cost of debt | 7.00% - 14.50% | 10.75% |
| WACC | 5.8% - 11.2% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.01 | 0.49 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.30% | 9.40% |
| Tax rate | 15.60% | 20.50% |
| Debt/Equity ratio | 6.2 | 6.2 |
| Cost of debt | 7.00% | 14.50% |
| After-tax WACC | 5.8% | 11.2% |
| Selected WACC | 8.5% | |
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 CWV.V:
cost_of_equity (7.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (-0.01) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.