TRQ.TO WACC - Weighted Average Cost of Capital

The WACC of Turquoise Hill Resources Ltd (TRQ.TO) is 8.6%.

The Cost of Equity of Turquoise Hill Resources Ltd (TRQ.TO) is 10.35%.

The Cost of Debt of Turquoise Hill Resources Ltd (TRQ.TO) is 8.00%.

	Range	Selected
Cost of equity	8.50% - 12.20%	10.35%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	7.60% - 8.40%	8.00%
WACC	7.4% - 9.8%	8.6%

WACC

TRQ.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.04	1.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	12.20%

Tax rate	25.90%	26.50%
Debt/Equity ratio	0.66	0.66
Cost of debt	7.60%	8.40%

After-tax WACC	7.4%	9.8%


Selected WACC	8.6%

TRQ.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 TRQ.TO:

cost_of_equity (10.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.04) + 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.