The WACC of Providence Resources PLC (PZQA.IR) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.50% - 15.70% | 11.60% |
| Tax rate | 12.50% - 12.50% | 12.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.9% - 10.0% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 6.4% | 7.4% |
| Adjusted beta | 0.71 | 1.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.50% | 15.70% |
| Tax rate | 12.50% | 12.50% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.9% | 10.0% |
| Selected WACC | 8.0% | |
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 PZQA.IR:
cost_of_equity (11.60%) = risk_free_rate (3.25%) + equity_risk_premium (6.90%) * adjusted_beta (0.71) + 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.