PXT.TO
Parex Resources Inc
Price:  
13.91 
CAD
Volume:  
217,705
Canada | Oil, Gas & Consumable Fuels

PXT.TO WACC - Weighted Average Cost of Capital

The WACC of Parex Resources Inc (PXT.TO) is 9.4%.

The Cost of Equity of Parex Resources Inc (PXT.TO) is 9.85%.
The Cost of Debt of Parex Resources Inc (PXT.TO) is 4.25%.

RangeSelected
Cost of equity8.6% - 11.1%9.85%
Tax rate33.5% - 41.0%37.25%
Cost of debt4.0% - 4.5%4.25%
WACC8.2% - 10.5%9.4%
WACC

PXT.TO WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium5.1%6.1%
Adjusted beta1.061.13
Additional risk adjustments0.0%0.5%
Cost of equity8.6%11.1%
Tax rate33.5%41.0%
Debt/Equity ratio
0.060.06
Cost of debt4.0%4.5%
After-tax WACC8.2%10.5%
Selected WACC9.4%

PXT.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 PXT.TO:

cost_of_equity (9.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.06) + 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.