LUG.TO WACC - Weighted Average Cost of Capital

The WACC of Lundin Gold Inc (LUG.TO) is 13.0%.

The Cost of Equity of Lundin Gold Inc (LUG.TO) is 11.05%.

The Cost of Debt of Lundin Gold Inc (LUG.TO) is 22.35%.

	Range	Selected
Cost of equity	9.50% - 12.60%	11.05%
Tax rate	28.40% - 34.50%	31.45%
Cost of debt	6.80% - 37.90%	22.35%
WACC	7.2% - 18.7%	13.0%

WACC

LUG.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.25	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.50%	12.60%

Tax rate	28.40%	34.50%
Debt/Equity ratio	1	1
Cost of debt	6.80%	37.90%

After-tax WACC	7.2%	18.7%


Selected WACC	13.0%

LUG.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 LUG.TO:

cost_of_equity (11.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.25) + 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.