ERO.TO WACC - Weighted Average Cost of Capital

The WACC of Ero Copper Corp (ERO.TO) is 9.7%.

The Cost of Equity of Ero Copper Corp (ERO.TO) is 10.20%.

The Cost of Debt of Ero Copper Corp (ERO.TO) is 7.50%.

	Range	Selected
Cost of equity	8.20% - 12.20%	10.20%
Tax rate	15.40% - 17.00%	16.20%
Cost of debt	4.10% - 10.90%	7.50%
WACC	7.6% - 11.8%	9.7%

WACC

ERO.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.99	1.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	12.20%

Tax rate	15.40%	17.00%
Debt/Equity ratio	0.16	0.16
Cost of debt	4.10%	10.90%

After-tax WACC	7.6%	11.8%


Selected WACC	9.7%

ERO.TO'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 ERO.TO:

cost_of_equity (10.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.99) + 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.