PEY.TO
Peyto Exploration & Development Corp
Price:  
20.51 
CAD
Volume:  
346,731.00
Canada | Oil, Gas & Consumable Fuels
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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 8.05%.
The Cost of Debt of Peyto Exploration & Development Corp (PEY.TO) is 5.45%.

Range Selected
Cost of equity 6.40% - 9.70% 8.05%
Tax rate 22.10% - 23.50% 22.80%
Cost of debt 5.40% - 5.50% 5.45%
WACC 5.9% - 8.3% 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 0.64 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.70%
Tax rate 22.10% 23.50%
Debt/Equity ratio 0.33 0.33
Cost of debt 5.40% 5.50%
After-tax WACC 5.9% 8.3%
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 (8.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.64) + 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.