The WACC of Argentina Lithium & Energy Corp (LIT.V) is 8.7%.
Range | Selected | |
Cost of equity | 7.3% - 10.6% | 8.95% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 7.1% - 10.3% | 8.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.68 | 0.94 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 10.6% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0.05 | 0.05 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 7.1% | 10.3% |
Selected WACC | 8.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LIT.V | Argentina Lithium & Energy Corp | 0.05 | 0.04 | 0.04 |
ALT.V | Alturas Minerals Corp | 0.28 | 0.5 | 0.41 |
CRB.V | Cariboo Rose Resources Ltd | 0.04 | 0.9 | 0.88 |
GRI.V | Galore Resources Inc | 0.18 | 0.63 | 0.56 |
HZNM | Horizon Minerals Corp | 0.1 | 0 | 0 |
JADE.V | Jade Leader Corp | 0.03 | 1.93 | 1.89 |
LWR.V | Lake Winn Resources Corp | 0.09 | 1.72 | 1.62 |
MFM.V | Marifil Mines Ltd | 0.06 | 1.4 | 1.35 |
NVT.V | Nortec Minerals Corp | 0.14 | 0.45 | 0.41 |
RRS.V | Rogue Resources Inc | 2.18 | 1.63 | 0.63 |
Low | High | |
Unlevered beta | 0.5 | 0.73 |
Relevered beta | 0.52 | 0.91 |
Adjusted relevered beta | 0.68 | 0.94 |
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 LIT.V:
cost_of_equity (8.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.68) + 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.