IPO.TO WACC - Weighted Average Cost of Capital

The WACC of InPlay Oil Corp (IPO.TO) is 9.1%.

The Cost of Equity of InPlay Oil Corp (IPO.TO) is 9.75%.

The Cost of Debt of InPlay Oil Corp (IPO.TO) is 9.25%.

	Range	Selected
Cost of equity	7.30% - 12.20%	9.75%
Tax rate	15.20% - 24.20%	19.70%
Cost of debt	6.80% - 11.70%	9.25%
WACC	6.9% - 11.3%	9.1%

WACC

IPO.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.81	1.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	12.20%

Tax rate	15.20%	24.20%
Debt/Equity ratio	0.35	0.35
Cost of debt	6.80%	11.70%

After-tax WACC	6.9%	11.3%


Selected WACC	9.1%

IPO.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 IPO.TO:

cost_of_equity (9.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.81) + 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.