ERO.TO WACC - Weighted Average Cost of Capital

The WACC of Ero Copper Corp (ERO.TO) is 9.6%.

The Cost of Equity of Ero Copper Corp (ERO.TO) is 11.10%.

The Cost of Debt of Ero Copper Corp (ERO.TO) is 7.60%.

	Range	Selected
Cost of equity	8.50% - 13.70%	11.10%
Tax rate	14.50% - 15.10%	14.80%
Cost of debt	5.40% - 9.80%	7.60%
WACC	7.3% - 12.0%	9.6%

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	1.06	1.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	13.70%

Tax rate	14.50%	15.10%
Debt/Equity ratio	0.47	0.47
Cost of debt	5.40%	9.80%

After-tax WACC	7.3%	12.0%


Selected WACC	9.6%

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 (11.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.06) + 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.