LUG.TO WACC - Weighted Average Cost of Capital

The WACC of Lundin Gold Inc (LUG.TO) is 18.2%.

The Cost of Equity of Lundin Gold Inc (LUG.TO) is 10.40%.

The Cost of Debt of Lundin Gold Inc (LUG.TO) is 37.90%.

	Range	Selected
Cost of equity	9.00% - 11.80%	10.40%
Tax rate	28.40% - 34.50%	31.45%
Cost of debt	37.90% - 37.90%	37.90%
WACC	18.1% - 18.3%	18.2%

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	1.15	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	11.80%

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

After-tax WACC	18.1%	18.3%


Selected WACC	18.2%

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 (10.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.15) + 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.