The WACC of Forage Orbit Garant Inc (OGD.TO) is 6.5%.
Range | Selected | |
Cost of equity | 6.1% - 9.7% | 7.9% |
Tax rate | 25.9% - 26.5% | 26.2% |
Cost of debt | 4.6% - 7.2% | 5.9% |
WACC | 5.1% - 8.0% | 6.5% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.58 | 0.91 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.1% | 9.7% |
Tax rate | 25.9% | 26.5% |
Debt/Equity ratio | 0.65 | 0.65 |
Cost of debt | 4.6% | 7.2% |
After-tax WACC | 5.1% | 8.0% |
Selected WACC | 6.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
OGD.TO | Forage Orbit Garant Inc | 0.65 | 0.23 | 0.15 |
ARG.TO | Amerigo Resources Ltd | 0.05 | 1.18 | 1.14 |
ASND.TO | Ascendant Resources Inc | 1.43 | -0.39 | -0.19 |
ATY.V | Atico Mining Corp | 2.32 | 0.69 | 0.26 |
GEO.TO | Geodrill Ltd | 0.09 | 1.84 | 1.73 |
GZZ.V | Golden Valley Mines Ltd | 0 | 1.01 | 1.01 |
NJMC | New Jersey Mining Co | 0.04 | 0.32 | 0.31 |
S.TO | Sherritt International Corp | 5 | 1.2 | 0.26 |
SNS.V | Select Sands Corp | 38.61 | 1.64 | 0.06 |
TSN.V | Telson Mining Corp | 0.28 | 2.07 | 1.71 |
Low | High | |
Unlevered beta | 0.26 | 0.59 |
Relevered beta | 0.37 | 0.87 |
Adjusted relevered beta | 0.58 | 0.91 |
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 OGD.TO:
cost_of_equity (7.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.