PEY.TO WACC - Weighted Average Cost of Capital

The WACC of Peyto Exploration & Development Corp (PEY.TO) is 4.6%.

The Cost of Equity of Peyto Exploration & Development Corp (PEY.TO) is 4.75%.

The Cost of Debt of Peyto Exploration & Development Corp (PEY.TO) is 4.90%.

	Range	Selected
Cost of equity	3.60% - 5.90%	4.75%
Tax rate	22.60% - 23.50%	23.05%
Cost of debt	4.20% - 5.60%	4.90%
WACC	3.6% - 5.6%	4.6%

WACC

PEY.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.09	0.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	3.60%	5.90%

Tax rate	22.60%	23.50%
Debt/Equity ratio	0.22	0.22
Cost of debt	4.20%	5.60%

After-tax WACC	3.6%	5.6%


Selected WACC	4.6%

PEY.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 PEY.TO:

cost_of_equity (4.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.09) + 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.