KEL.TO WACC - Weighted Average Cost of Capital

The WACC of Kelt Exploration Ltd (KEL.TO) is 10.0%.

The Cost of Equity of Kelt Exploration Ltd (KEL.TO) is 8.70%.

The Cost of Debt of Kelt Exploration Ltd (KEL.TO) is 36.55%.

	Range	Selected
Cost of equity	6.00% - 11.40%	8.70%
Tax rate	23.20% - 24.60%	23.90%
Cost of debt	4.00% - 69.10%	36.55%
WACC	5.8% - 14.1%	10.0%

WACC

KEL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.56	1.18

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	11.40%

Tax rate	23.20%	24.60%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.00%	69.10%

After-tax WACC	5.8%	14.1%


Selected WACC	10.0%

KEL.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 KEL.TO:

cost_of_equity (8.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.56) + 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.