The WACC of Golden Star Resources Ltd (GSC.TO) is 8.9%.
| Range | Selected | |
| Cost of equity | 8.50% - 11.60% | 10.05% |
| Tax rate | 26.50% - 26.50% | 26.50% |
| Cost of debt | 4.70% - 5.60% | 5.15% |
| WACC | 7.6% - 10.2% | 8.9% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.1 | 1.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.50% | 11.60% |
| Tax rate | 26.50% | 26.50% |
| Debt/Equity ratio | 0.24 | 0.24 |
| Cost of debt | 4.70% | 5.60% |
| After-tax WACC | 7.6% | 10.2% |
| Selected WACC | 8.9% | |
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 GSC.TO:
cost_of_equity (10.05%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (1.1) + 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.