PAAS.TO WACC - Weighted Average Cost of Capital

The WACC of Pan American Silver Corp (PAAS.TO) is 10.5%.

The Cost of Equity of Pan American Silver Corp (PAAS.TO) is 10.85%.

The Cost of Debt of Pan American Silver Corp (PAAS.TO) is 8.80%.

	Range	Selected
Cost of equity	9.10% - 12.60%	10.85%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	4.00% - 13.60%	8.80%
WACC	8.6% - 12.4%	10.5%

WACC

PAAS.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.16	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	12.60%

Tax rate	25.90%	26.50%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	13.60%

After-tax WACC	8.6%	12.4%


Selected WACC	10.5%

PAAS.TO'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 PAAS.TO:

cost_of_equity (10.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.16) + 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.