DEFN.V WACC - Weighted Average Cost of Capital
The WACC of Defense Metals Corp (DEFN.V) is 7.8%.
| Range | Selected | |
| Cost of equity | 9.1% - 14.8% | 11.95% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.4% - 9.2% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.02 | 1.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.1% | 14.8% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.4% | 9.2% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DEFN.V | Defense Metals Corp | 0.05 | 0.4 | 0.38 |
| BAU.V | Blue Star Gold Corp | 0.11 | 1.66 | 1.54 |
| ECU.V | Element 29 Resources Inc | 0 | 0.45 | 0.45 |
| EMO.V | Emerita Resources Corp | 0.02 | 0.53 | 0.52 |
| GCX.V | Granite Creek Copper Ltd | 0.05 | 1.37 | 1.32 |
| GLDC.V | Cassiar Gold Corp | 0 | 1.54 | 1.54 |
| GOH.CN | Goldhaven Resources Corp | 0 | -1.87 | -1.87 |
| GXX.CN | Gold Basin Resources Corp | 0 | 1.03 | 1.02 |
| LUX.CN | Newlox Gold Ventures Corp | 0.39 | -0.72 | -0.56 |
| MMA.V | Midnight Sun Mining Corp | 0 | 1.27 | 1.26 |
| RDG.V | Ridgeline Minerals Corp | 0.01 | 0.65 | 0.64 |
| Low | High | |
| Unlevered beta | 0.52 | 1.02 |
| Relevered beta | 1.03 | 1.94 |
| Adjusted relevered beta | 1.02 | 1.63 |
DEFN.V'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 DEFN.V:
cost_of_equity (11.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (1.02) + 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.