MCS.V
McChip Resources Inc
Price:  
1.98 
CAD
Volume:  
5,850
Canada | Oil, Gas & Consumable Fuels

MCS.V WACC - Weighted Average Cost of Capital

The WACC of McChip Resources Inc (MCS.V) is 5.9%.

The Cost of Equity of McChip Resources Inc (MCS.V) is 6.35%.
The Cost of Debt of McChip Resources Inc (MCS.V) is 5.8%.

RangeSelected
Cost of equity5.6% - 7.1%6.35%
Tax rate26.2% - 27.0%26.6%
Cost of debt5.1% - 6.5%5.8%
WACC5.2% - 6.6%5.9%
WACC

MCS.V WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium5.1%6.1%
Adjusted beta0.340.37
Additional risk adjustments0.0%0.5%
Cost of equity5.6%7.1%
Tax rate26.2%27.0%
Debt/Equity ratio
0.30.3
Cost of debt5.1%6.5%
After-tax WACC5.2%6.6%
Selected WACC5.9%

MCS.V WACC - Detailed calculations of Beta

LowHigh
Unlevered beta0.040.16
Relevered beta0.010.06
Adjusted relevered beta0.340.37

MCS.V'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 MCS.V:

cost_of_equity (6.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.34) + 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.