KEL.TO WACC - Weighted Average Cost of Capital

The WACC of Kelt Exploration Ltd (KEL.TO) is 6.9%.

The Cost of Equity of Kelt Exploration Ltd (KEL.TO) is 5.05%.

The Cost of Debt of Kelt Exploration Ltd (KEL.TO) is 36.90%.

	Range	Selected
Cost of equity	3.60% - 6.50%	5.05%
Tax rate	24.70% - 24.90%	24.80%
Cost of debt	4.40% - 69.40%	36.90%
WACC	3.5% - 10.3%	6.9%

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	-0.12	0.22

Additional risk adjustments	1.0%	1.5%
Cost of equity	3.60%	6.50%

Tax rate	24.70%	24.90%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.40%	69.40%

After-tax WACC	3.5%	10.3%


Selected WACC	6.9%

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 (5.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (-0.12) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.