The WACC of FEC Resources Inc (FECOF) is 5.2%.
Range | Selected | |
Cost of equity | 4.8% - 7.1% | 5.95% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.5% - 5.9% | 5.2% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.21 | 0.39 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 4.8% | 7.1% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0.49 | 0.49 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.5% | 5.9% |
Selected WACC | 5.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FECOF | FEC Resources Inc | 0.49 | -0.45 | -0.33 |
FNRC | 1st NRG Corp | 320.29 | 0 | 0 |
IFR.V | International Frontier Resources Corp | 0.06 | 0.9 | 0.86 |
JBR.CN | James Bay Resources Ltd | 0.51 | -1.78 | -1.3 |
LNE.H.V | Loon Energy Corp | 0.13 | 0.98 | 0.9 |
PCQ.V | Petrolympic Ltd | 0 | -1.04 | -1.04 |
STMP.V | Stamper Oil & Gas Corp | 0 | 2.05 | 2.05 |
TRSI | Trophy Resources Inc | 32.23 | 1.29 | 0.05 |
VRY.V | Petro Victory Energy Corp | 0.68 | -1.38 | -0.93 |
Low | High | |
Unlevered beta | -0.27 | 0.04 |
Relevered beta | -0.18 | 0.09 |
Adjusted relevered beta | 0.21 | 0.39 |
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 FECOF:
cost_of_equity (5.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.21) + 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.