The WACC of Steppe Gold Ltd (STGO.TO) is 15.9%.
| Range | Selected | |
| Cost of equity | 10.10% - 14.00% | 12.05% |
| Tax rate | 9.80% - 15.00% | 12.40% |
| Cost of debt | 7.00% - 37.40% | 22.20% |
| WACC | 8.0% - 23.8% | 15.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.37 | 1.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.10% | 14.00% |
| Tax rate | 9.80% | 15.00% |
| Debt/Equity ratio | 1.22 | 1.22 |
| Cost of debt | 7.00% | 37.40% |
| After-tax WACC | 8.0% | 23.8% |
| Selected WACC | 15.9% | |
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 STGO.TO:
cost_of_equity (12.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.37) + 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.