OTGO.V WACC - Weighted Average Cost of Capital
The WACC of O2Gold Inc (OTGO.V) is 7.4%.
| Range | Selected | |
| Cost of equity | 9.4% - 12.7% | 11.05% |
| Tax rate | 27.0% - 27.0% | 27% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.5% - 8.2% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.32 | 1.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 12.7% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.5% | 8.2% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| OTGO.V | O2Gold Inc | 1.17 | 1.08 | 0.58 |
| AOC.CN | Advantagewon Oil Corp | 0.08 | 1.87 | 1.76 |
| BRVO | Bravo Multinational Inc | 0.07 | 2.27 | 2.15 |
| HWY.V | Highway 50 Gold Corp | 0.07 | 0.26 | 0.25 |
| LEXI.V | Lithium Energi Exploration Inc | 2.73 | 1.5 | 0.5 |
| NXS.V | Nexus Gold Corp | 0.98 | 3.63 | 2.11 |
| OTS.H.V | Optimus Gold Corp | 0.08 | -0.59 | -0.56 |
| SGC.V | Solstice Gold Corp | 0.01 | 2.7 | 2.69 |
| SGO.V | Sonoro Gold Corp | 0.15 | 2.19 | 1.97 |
| STU.V | Stuhini Exploration Ltd | 0.95 | 1.56 | 0.92 |
| TOPZ | Topaz Resources Inc | 0.56 | 0.08 | 0.06 |
| Low | High | |
| Unlevered beta | 0.58 | 1.76 |
| Relevered beta | 1.48 | 1.73 |
| Adjusted relevered beta | 1.32 | 1.49 |
OTGO.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 OTGO.V:
cost_of_equity (11.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.20%) * adjusted_beta (1.32) + 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.