SRX.TO WACC - Weighted Average Cost of Capital

The WACC of Storm Resources Ltd (SRX.TO) is 7.5%.

The Cost of Equity of Storm Resources Ltd (SRX.TO) is 8.15%.

The Cost of Debt of Storm Resources Ltd (SRX.TO) is 4.60%.

	Range	Selected
Cost of equity	6.60% - 9.70%	8.15%
Tax rate	5.90% - 18.00%	11.95%
Cost of debt	4.20% - 5.00%	4.60%
WACC	6.2% - 8.8%	7.5%

WACC

SRX.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.7	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.70%

Tax rate	5.90%	18.00%
Debt/Equity ratio	0.18	0.18
Cost of debt	4.20%	5.00%

After-tax WACC	6.2%	8.8%


Selected WACC	7.5%

SRX.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 SRX.TO:

cost_of_equity (8.15%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.7) + 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.