HME.V WACC - Weighted Average Cost of Capital

The WACC of Hemisphere Energy Corp (HME.V) is 9.6%.

The Cost of Equity of Hemisphere Energy Corp (HME.V) is 9.75%.

The Cost of Debt of Hemisphere Energy Corp (HME.V) is 6.25%.

	Range	Selected
Cost of equity	8.20% - 11.30%	9.75%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	4.50% - 8.00%	6.25%
WACC	8.1% - 11.2%	9.6%

WACC

HME.V WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.86	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	11.30%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.50%	8.00%

After-tax WACC	8.1%	11.2%


Selected WACC	9.6%

HME.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 HME.V:

cost_of_equity (9.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.86) + 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.