LUN.TO WACC - Weighted Average Cost of Capital

The WACC of Lundin Mining Corp (LUN.TO) is 8.5%.

The Cost of Equity of Lundin Mining Corp (LUN.TO) is 8.95%.

The Cost of Debt of Lundin Mining Corp (LUN.TO) is 11.35%.

	Range	Selected
Cost of equity	7.40% - 10.50%	8.95%
Tax rate	37.90% - 44.00%	40.95%
Cost of debt	4.20% - 18.50%	11.35%
WACC	6.5% - 10.5%	8.5%

WACC

LUN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.84	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	10.50%

Tax rate	37.90%	44.00%
Debt/Equity ratio	0.22	0.22
Cost of debt	4.20%	18.50%

After-tax WACC	6.5%	10.5%


Selected WACC	8.5%

LUN.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 LUN.TO:

cost_of_equity (8.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.84) + 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.