The WACC of LKA Gold Inc (LKAI) is 4.4%.
Range | Selected | |
Cost of equity | 3.2% - 87.4% | 45.3% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 3.7% - 5.1% | 4.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | -9.49 | 7.06 |
Additional risk adjustments | 43.0% | 43.5% |
Cost of equity | 3.2% | 87.4% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 54.87 | 54.87 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 3.7% | 5.1% |
Selected WACC | 4.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LKAI | LKA Gold Inc | 54.87 | 35.95 | 0.88 |
AM.V | Academy Metals Inc | 3.4 | 0.41 | 0.12 |
ANG.V | Angel Gold Corp | 0.14 | 1.03 | 0.93 |
BLXX | Blox Inc | 0.15 | 1.11 | 1 |
GDX.V | Goldex Resources Corp | 0.53 | -1.53 | -1.1 |
KGL.V | KGL Resources Ltd | 0.46 | -0.44 | -0.33 |
LMG.V | Lincoln Gold Mining Inc | 0.63 | -1.27 | -0.87 |
LRC.H.V | Lovitt Resources Inc | 1.63 | -0.86 | -0.39 |
NMG.H.V | Noble Metal Group Inc | 0.86 | 0.71 | 0.44 |
TYP.V | Typhoon Exploration Inc | 0.03 | 2.04 | 2 |
WRI.V | Waseco Resources Inc | 0.04 | -0.87 | -0.85 |
Low | High | |
Unlevered beta | -0.33 | 0.44 |
Relevered beta | -14.66 | 10.04 |
Adjusted relevered beta | -9.49 | 7.06 |
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 LKAI:
cost_of_equity (45.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-9.49) + risk_adjustments (43.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.