FM.TO WACC - Weighted Average Cost of Capital

The WACC of First Quantum Minerals Ltd (FM.TO) is 8.8%.

The Cost of Equity of First Quantum Minerals Ltd (FM.TO) is 10.90%.

The Cost of Debt of First Quantum Minerals Ltd (FM.TO) is 7.45%.

	Range	Selected
Cost of equity	8.90% - 12.90%	10.90%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	6.50% - 8.40%	7.45%
WACC	7.4% - 10.3%	8.8%

WACC

FM.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.13	1.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	12.90%

Tax rate	25.90%	26.50%
Debt/Equity ratio	0.63	0.63
Cost of debt	6.50%	8.40%

After-tax WACC	7.4%	10.3%


Selected WACC	8.8%

FM.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 FM.TO:

cost_of_equity (10.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.13) + 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.