The WACC of Fiore Gold Ltd (F.V) is 9.0%.
| Range | Selected | |
| Cost of equity | 7.70% - 10.50% | 9.10% |
| Tax rate | 4.00% - 12.70% | 8.35% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 7.7% - 10.3% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.97 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 10.50% |
| Tax rate | 4.00% | 12.70% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 7.7% | 10.3% |
| Selected WACC | 9.0% | |
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 F.V:
cost_of_equity (9.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.20%) * adjusted_beta (0.97) + 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.