The WACC of Majestic Gold Corp (MJS.V) is 10.0%.
| Range | Selected | |
| Cost of equity | 8.20% - 11.80% | 10.00% |
| Tax rate | 35.90% - 36.90% | 36.40% |
| Cost of debt | 4.40% - 4.50% | 4.45% |
| WACC | 8.1% - 11.8% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.84 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.20% | 11.80% |
| Tax rate | 35.90% | 36.90% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.40% | 4.50% |
| After-tax WACC | 8.1% | 11.8% |
| Selected WACC | 10.0% | |
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 MJS.V:
cost_of_equity (10.00%) = risk_free_rate (4.15%) + 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.