The WACC of Deep South Resources Inc (DSM.V) is 9.2%.
Range | Selected | |
Cost of equity | 12.4% - 17.0% | 14.7% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 8.1% - 10.3% | 9.2% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.5% | 6.5% |
Adjusted beta | 1.5 | 1.81 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.4% | 17.0% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 8.1% | 10.3% |
Selected WACC | 9.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
DSM.V | Deep South Resources Inc | 0.86 | 0.45 | 0.28 |
APGO.V | Apollo Gold & Silver Corp | 0 | 2.55 | 2.54 |
ASE.CN | Asante Gold Corp | 0.09 | 0.47 | 0.44 |
GFG.V | GFG Resources Inc | 0 | 0.6 | 0.6 |
KTO.V | K2 Gold Corp | 0 | 1.33 | 1.33 |
MM.CN | Metallica Metals Corp | 0 | 1.49 | 1.49 |
MTU.V | Manitou Gold Inc | 0 | 0.96 | 0.96 |
NGE.V | Nevada Exploration Inc | 0.08 | -0.2 | -0.19 |
OREA.TO | Orea Mining Corp | 0.01 | 2.62 | 2.59 |
RDU.V | Radius Gold Inc | 0.01 | 1.89 | 1.88 |
SOMA.V | Soma Gold Corp | 0.4 | 0.37 | 0.28 |
Low | High | |
Unlevered beta | 0.6 | 1.33 |
Relevered beta | 1.75 | 2.21 |
Adjusted relevered beta | 1.5 | 1.81 |
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 DSM.V:
cost_of_equity (14.70%) = risk_free_rate (4.45%) + equity_risk_premium (6.00%) * adjusted_beta (1.5) + 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.