FECOF
FEC Resources Inc
Price:  
USD
Volume:  
3,110
Canada | Oil, Gas & Consumable Fuels

FECOF WACC - Weighted Average Cost of Capital

The WACC of FEC Resources Inc (FECOF) is 5.2%.

The Cost of Equity of FEC Resources Inc (FECOF) is 5.95%.
The Cost of Debt of FEC Resources Inc (FECOF) is 5%.

RangeSelected
Cost of equity4.8% - 7.1%5.95%
Tax rate26.2% - 27.0%26.6%
Cost of debt5.0% - 5.0%5%
WACC4.5% - 5.9%5.2%
WACC

FECOF WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.210.39
Additional risk adjustments0.0%0.5%
Cost of equity4.8%7.1%
Tax rate26.2%27.0%
Debt/Equity ratio
0.490.49
Cost of debt5.0%5.0%
After-tax WACC4.5%5.9%
Selected WACC5.2%

FECOF'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 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.