The WACC of Southern Pacific Resource Corp (STPJF) is 5.8%.
| Range | Selected | |
| Cost of equity | 22,571.20% - 44,722.40% | 33,646.80% |
| Tax rate | 24.80% - 34.30% | 29.55% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 5.8% - 5.7% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 4905.94 | 7985.28 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22,571.20% | 44,722.40% |
| Tax rate | 24.80% | 34.30% |
| Debt/Equity ratio | 40574.79 | 40574.79 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 5.8% | 5.7% |
| Selected WACC | 5.8% | |
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 STPJF:
cost_of_equity (33,646.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (4905.94) + 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.