The WACC of Petrotal Corp (TAL.V) is 10.7%.
Range | Selected | |
Cost of equity | 10.7% - 13.4% | 12.05% |
Tax rate | 4.1% - 5.8% | 4.95% |
Cost of debt | 4.9% - 4.9% | 4.9% |
WACC | 9.6% - 11.8% | 10.7% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.5% | 6.5% |
Adjusted beta | 1.19 | 1.27 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.7% | 13.4% |
Tax rate | 4.1% | 5.8% |
Debt/Equity ratio | 0.22 | 0.22 |
Cost of debt | 4.9% | 4.9% |
After-tax WACC | 9.6% | 11.8% |
Selected WACC | 10.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
TAL.V | Petrotal Corp | 0.22 | 2.07 | 1.71 |
BNE.TO | Bonterra Energy Corp | 1.3 | 1.5 | 0.67 |
FLMN | Falcon Minerals Corp | 0.06 | 1.52 | 1.44 |
GDP | Goodrich Petroleum Corp | 0.35 | 1.62 | 1.21 |
KRP | Kimbell Royalty Partners LP | 0.16 | 0.76 | 0.66 |
ORC.B.V | Orca Exploration Group Inc | 0.35 | 1.05 | 0.79 |
PIPE.TO | Pipestone Energy Corp | 0.39 | 1.39 | 1.01 |
REI | Ring Energy Inc | 2.28 | 1.18 | 0.37 |
SGY.TO | Surge Energy Inc | 0.44 | 1.38 | 0.97 |
SRX.TO | Storm Resources Ltd | 0.18 | 1.44 | 1.23 |
Low | High | |
Unlevered beta | 0.9 | 1.09 |
Relevered beta | 1.28 | 1.4 |
Adjusted relevered beta | 1.19 | 1.27 |
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 TAL.V:
cost_of_equity (12.05%) = risk_free_rate (4.45%) + equity_risk_premium (6.00%) * adjusted_beta (1.19) + 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.