The WACC of Journey Energy Inc (JOY.TO) is 7.8%.
| Range | Selected | |
| Cost of equity | 5.70% - 10.60% | 8.15% |
| Tax rate | 15.00% - 23.80% | 19.40% |
| Cost of debt | 4.60% - 8.60% | 6.60% |
| WACC | 5.5% - 10.1% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.5 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 10.60% |
| Tax rate | 15.00% | 23.80% |
| Debt/Equity ratio | 0.14 | 0.14 |
| Cost of debt | 4.60% | 8.60% |
| After-tax WACC | 5.5% | 10.1% |
| Selected WACC | 7.8% | |
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 JOY.TO:
cost_of_equity (8.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.