HME.V WACC - Weighted Average Cost of Capital

The WACC of Hemisphere Energy Corp (HME.V) is 10.7%.

The Cost of Equity of Hemisphere Energy Corp (HME.V) is 10.80%.

The Cost of Debt of Hemisphere Energy Corp (HME.V) is 7.00%.

	Range	Selected
Cost of equity	9.20% - 12.40%	10.80%
Tax rate	14.40% - 24.60%	19.50%
Cost of debt	4.50% - 9.50%	7.00%
WACC	9.1% - 12.3%	10.7%

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	1.04	1.24

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	12.40%

Tax rate	14.40%	24.60%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.50%	9.50%

After-tax WACC	9.1%	12.3%


Selected WACC	10.7%

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 (10.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (1.04) + 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.