NUGT.CN
Prophecy Potash Corp
Price:  
1.01 
CAD
Volume:  
11,060.00
Canada | N/A
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NUGT.CN WACC - Weighted Average Cost of Capital

The WACC of Prophecy Potash Corp (NUGT.CN) is 7.2%.

The Cost of Equity of Prophecy Potash Corp (NUGT.CN) is 10.80%.
The Cost of Debt of Prophecy Potash Corp (NUGT.CN) is 5.00%.

Range Selected
Cost of equity 8.80% - 12.80% 10.80%
Tax rate 26.50% - 26.50% 26.50%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.2% - 8.2% 7.2%
WACC

NUGT.CN WACC calculation

Category Low High
Long-term bond rate 3.4% 3.9%
Equity market risk premium 4.7% 5.7%
Adjusted beta 1.14 1.47
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.80% 12.80%
Tax rate 26.50% 26.50%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 6.2% 8.2%
Selected WACC 7.2%

NUGT.CN'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 NUGT.CN:

cost_of_equity (10.80%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (1.14) + 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.