FMC.V WACC - Weighted Average Cost of Capital
The WACC of Forum Energy Metals Corp (FMC.V) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.6% - 15.2% | 10.4% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.7% - 9.4% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.34 | 1.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 15.2% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.7% | 9.4% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FMC.V | Forum Energy Metals Corp | 1.16 | 2.86 | 1.55 |
| AMR.V | AM Resources Corp | 0.05 | -0.24 | -0.24 |
| BULL.CN | Canadian Palladium Resources Inc | 0.12 | -0.37 | -0.34 |
| CVV.V | CanAlaska Uranium Ltd | 0.01 | 2.03 | 2.02 |
| FUU.V | Fission 3.0 Corp | 0.11 | 1.54 | 1.43 |
| LAM.TO | Laramide Resources Ltd | 0.03 | 1.66 | 1.62 |
| PLU.V | Plateau Energy Metals Inc | 0 | 1.6 | 1.6 |
| PTU.V | Purepoint Uranium Group Inc | 0 | -0.1 | -0.1 |
| SML.V | Southstone Minerals Ltd | 2.46 | -2.08 | -0.74 |
| SRI.V | Sparton Resources Inc | 0.09 | 1.08 | 1.01 |
| UWE.H.V | U3O8 Corp | 0.17 | 0.09 | 0.08 |
| Low | High | |
| Unlevered beta | 0.08 | 1.43 |
| Relevered beta | 0.01 | 2.03 |
| Adjusted relevered beta | 0.34 | 1.69 |
FMC.V'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 FMC.V:
cost_of_equity (10.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.34) + 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.