The WACC of Neo Lithium Corp (NLC.V) is 10.1%.
| Range | Selected | |
| Cost of equity | 8.40% - 11.90% | 10.15% |
| Tax rate | 1.60% - 11.80% | 6.70% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.4% - 11.9% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.1 | 1.34 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 11.90% |
| Tax rate | 1.60% | 11.80% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.4% | 11.9% |
| Selected WACC | 10.1% | |
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 NLC.V:
cost_of_equity (10.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.20%) * adjusted_beta (1.1) + 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.