TRQ.TO WACC - Weighted Average Cost of Capital
The WACC of Turquoise Hill Resources Ltd (TRQ.TO) is 8.6%.
| Range | Selected | |
| Cost of equity | 8.7% - 12.2% | 10.45% |
| Tax rate | 25.9% - 26.5% | 26.2% |
| Cost of debt | 7.6% - 8.4% | 8% |
| WACC | 7.5% - 9.8% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.08 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.7% | 12.2% |
| Tax rate | 25.9% | 26.5% |
| Debt/Equity ratio | 0.66 | 0.66 |
| Cost of debt | 7.6% | 8.4% |
| After-tax WACC | 7.5% | 9.8% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TRQ.TO | Turquoise Hill Resources Ltd | 0.66 | 1.54 | 1.04 |
| AFM.V | Alphamin Resources Corp | 0.09 | 0.75 | 0.71 |
| ARG.TO | Amerigo Resources Ltd | 0.04 | 1.1 | 1.07 |
| CMP | Compass Minerals International Inc | 1.01 | 0.98 | 0.56 |
| FAR.TO | Foraco International SA | 0.64 | 1.42 | 0.96 |
| LAC.TO | Lithium Americas Corp | 0.03 | 1.11 | 1.09 |
| LGO.TO | Largo Resources Ltd | 1.01 | 1.38 | 0.79 |
| MDI.TO | Major Drilling Group International Inc | 0.01 | 1.8 | 1.79 |
| S.TO | Sherritt International Corp | 4.69 | 1.16 | 0.26 |
| SMT.TO | Sierra Metals Inc | 0.59 | 0.26 | 0.18 |
| Low | High | |
| Unlevered beta | 0.76 | 0.99 |
| Relevered beta | 1.12 | 1.48 |
| Adjusted relevered beta | 1.08 | 1.32 |
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 (10.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.08) + 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.