RE.V WACC - Weighted Average Cost of Capital
The WACC of RE Royalties Ltd (RE.V) is 9.1%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.4% | 6.5% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 13.0% - 15.6% | 14.3% |
| WACC | 8.1% - 10.0% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.34 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.8 | 1.8 |
| Cost of debt | 13.0% | 15.6% |
| After-tax WACC | 8.1% | 10.0% |
| Selected WACC | 9.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RE.V | RE Royalties Ltd | 1.8 | 0.47 | 0.2 |
| ELLO | Ellomay Capital Ltd | 2.45 | 0.23 | 0.08 |
| ETX.TO | Etrion Corp | 3.52 | 0.32 | 0.09 |
| NKW.V | Oceanic Wind Energy Inc | 0 | -0.75 | -0.74 |
| NOVA | Sunnova Energy International Inc | 312.71 | 1.67 | 0.01 |
| PSPW | 3Power Energy Group Inc | 6.1 | -1.08 | -0.2 |
| PSWW | Principal Solar Inc | 33.55 | 0.85 | 0.03 |
| PWCO | PwrCor Inc | 0.02 | -1.41 | -1.38 |
| VVPR | VivoPower International PLC | 1.42 | 0.26 | 0.13 |
| Low | High | |
| Unlevered beta | 0.01 | 0.07 |
| Relevered beta | 0.01 | 0.12 |
| Adjusted relevered beta | 0.34 | 0.41 |
RE.V'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 RE.V:
cost_of_equity (6.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.34) + 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.