The WACC of Freeport-McMoRan Inc (FCX) is 9.1%.
Range | Selected | |
Cost of equity | 8.3% - 11.9% | 10.1% |
Tax rate | 35.4% - 37.0% | 36.2% |
Cost of debt | 4.3% - 4.5% | 4.4% |
WACC | 7.5% - 10.6% | 9.1% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.97 | 1.26 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.3% | 11.9% |
Tax rate | 35.4% | 37.0% |
Debt/Equity ratio | 0.16 | 0.16 |
Cost of debt | 4.3% | 4.5% |
After-tax WACC | 7.5% | 10.6% |
Selected WACC | 9.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FCX | Freeport-McMoRan Inc | 0.16 | 1.91 | 1.73 |
ERO.TO | Ero Copper Corp | 0.45 | 2.03 | 1.58 |
III.TO | Imperial Metals Corp | 0.64 | 1.33 | 0.94 |
MARI.TO | Marimaca Copper Corp | 0 | 0.35 | 0.35 |
SCCO | Southern Copper Corp | 0.09 | 1.31 | 1.24 |
SRHI.TO | SRHI Inc | 6.48 | 1.85 | 0.36 |
SURG.V | Surge Copper Corp | 0 | 1.66 | 1.66 |
TKO.TO | Taseko Mines Ltd | 0.94 | 2.04 | 1.28 |
TM.V | Trigon Metals Inc | 0.4 | 0.92 | 0.73 |
Low | High | |
Unlevered beta | 1 | 1.27 |
Relevered beta | 0.96 | 1.39 |
Adjusted relevered beta | 0.97 | 1.26 |
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 FCX:
cost_of_equity (10.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * 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.