PEY.TO WACC - Weighted Average Cost of Capital

The WACC of Peyto Exploration & Development Corp (PEY.TO) is 7.1%.

The Cost of Equity of Peyto Exploration & Development Corp (PEY.TO) is 8.20%.

The Cost of Debt of Peyto Exploration & Development Corp (PEY.TO) is 5.45%.

	Range	Selected
Cost of equity	6.50% - 9.90%	8.20%
Tax rate	22.10% - 23.50%	22.80%
Cost of debt	5.40% - 5.50%	5.45%
WACC	5.9% - 8.4%	7.1%

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	0.65	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.90%

Tax rate	22.10%	23.50%
Debt/Equity ratio	0.35	0.35
Cost of debt	5.40%	5.50%

After-tax WACC	5.9%	8.4%


Selected WACC	7.1%

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 (8.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.65) + 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.