The WACC of El Nino Ventures Inc (ELN.V) is 8.3%.
Range | Selected | |
Cost of equity | 10.4% - 15.6% | 13% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.0% - 9.6% | 8.3% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.5% | 6.5% |
Adjusted beta | 1.13 | 1.6 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.4% | 15.6% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.0% | 9.6% |
Selected WACC | 8.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
ELN.V | El Nino Ventures Inc | 0.83 | 1.46 | 0.91 |
BMIN | Britannia Mining Inc | 0.01 | 0.58 | 0.58 |
CDC.V | Cadillac Ventures Inc | 0.23 | 1.59 | 1.36 |
CDN.CN | CDN Maverick Capital Corp | 0.81 | 0.52 | 0.33 |
GCC.V | Golden Cariboo Resources Ltd | 0 | 1.49 | 1.49 |
IMR.V | iMetal Resources Inc | 1.11 | -0.71 | -0.39 |
JJJ.X.CN | 37 Capital Inc | 0.47 | 2.34 | 1.74 |
PBM.V | Pacific Bay Minerals Ltd | 0.01 | 2.76 | 2.74 |
SFX.V | Sphinx Resources Ltd | 0.03 | 0.4 | 0.39 |
SUPR.V | Supernova Metals Corp | 0.02 | 1.55 | 1.52 |
SXL.V | Slam Exploration Ltd | 0.01 | -1.21 | -1.2 |
Low | High | |
Unlevered beta | 0.58 | 1.36 |
Relevered beta | 1.19 | 1.9 |
Adjusted relevered beta | 1.13 | 1.6 |
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 ELN.V:
cost_of_equity (13.00%) = risk_free_rate (4.45%) + equity_risk_premium (6.00%) * adjusted_beta (1.13) + 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.