FNV.TO WACC - Weighted Average Cost of Capital

The WACC of Franco-Nevada Corp (FNV.TO) is 7.0%.

The Cost of Equity of Franco-Nevada Corp (FNV.TO) is 10.60%.

The Cost of Debt of Franco-Nevada Corp (FNV.TO) is 4.25%.

	Range	Selected
Cost of equity	8.90% - 12.30%	10.60%
Tax rate	15.40% - 20.70%	18.05%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.1% - 7.9%	7.0%

WACC

FNV.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.12	1.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	12.30%

Tax rate	15.40%	20.70%
Debt/Equity ratio	1	1
Cost of debt	4.00%	4.50%

After-tax WACC	6.1%	7.9%


Selected WACC	7.0%

FNV.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 FNV.TO:

cost_of_equity (10.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.12) + 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.