The WACC of Crown Point Energy Inc (CWV.V) is 8.6%.
| Range | Selected | |
| Cost of equity | 5.50% - 12.60% | 9.05% |
| Tax rate | 15.60% - 23.80% | 19.70% |
| Cost of debt | 7.00% - 14.60% | 10.80% |
| WACC | 5.8% - 11.5% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -1.44 | -0.21 |
| Additional risk adjustments | 9.0% | 9.5% |
| Cost of equity | 5.50% | 12.60% |
| Tax rate | 15.60% | 23.80% |
| Debt/Equity ratio | 3.44 | 3.44 |
| Cost of debt | 7.00% | 14.60% |
| After-tax WACC | 5.8% | 11.5% |
| Selected WACC | 8.6% | |
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 (9.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (-1.44) + risk_adjustments (9.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.