PRQ.TO WACC - Weighted Average Cost of Capital

The WACC of Petrus Resources Ltd (PRQ.TO) is 7.3%.

The Cost of Equity of Petrus Resources Ltd (PRQ.TO) is 6.80%.

The Cost of Debt of Petrus Resources Ltd (PRQ.TO) is 13.05%.

	Range	Selected
Cost of equity	5.40% - 8.20%	6.80%
Tax rate	16.50% - 34.40%	25.45%
Cost of debt	11.20% - 14.90%	13.05%
WACC	6.2% - 8.5%	7.3%

WACC

PRQ.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	-0.25	0.09

Additional risk adjustments	3.5%	4.0%
Cost of equity	5.40%	8.20%

Tax rate	16.50%	34.40%
Debt/Equity ratio	0.26	0.26
Cost of debt	11.20%	14.90%

After-tax WACC	6.2%	8.5%


Selected WACC	7.3%

PRQ.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 PRQ.TO:

cost_of_equity (6.80%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (-0.25) + risk_adjustments (3.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.