TRSI WACC - Weighted Average Cost of Capital
The WACC of Trophy Resources Inc (TRSI) is 3.9%.
| Range | Selected | |
| Cost of equity | 3.1% - 17.6% | 10.35% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 3.7% - 4.0% | 3.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -1.48 | 1.2 |
| Additional risk adjustments | 6.0% | 6.5% |
| Cost of equity | 3.1% | 17.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 34.07 | 34.07 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 3.7% | 4.0% |
| Selected WACC | 3.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TRSI | Trophy Resources Inc | 34.07 | 1.23 | 0.05 |
| AMAZ | Amazing Energy Oil and Gas Co | 621.81 | 1.07 | 0 |
| DBRM | Daybreak Oil and Gas Inc | 36.67 | 1.51 | 0.05 |
| DXI.H.V | DXI Capital Corp | 0.42 | -1.96 | -1.5 |
| GASE | Gase Energy Inc | 2.02 | -0.65 | -0.26 |
| JBR.CN | James Bay Resources Ltd | 0.51 | -1.9 | -1.39 |
| LNE.H.V | Loon Energy Corp | 0.13 | 0.98 | 0.9 |
| MCS.V | McChip Resources Inc | 0.27 | 0.7 | 0.58 |
| PROP | Pledge Petroleum Corp | 0.28 | 2.08 | 1.72 |
| VRY.V | Petro Victory Energy Corp | 0.9 | -1.58 | -0.95 |
| Low | High | |
| Unlevered beta | -0.1 | 0.05 |
| Relevered beta | -2.7 | 1.3 |
| Adjusted relevered beta | -1.48 | 1.2 |
TRSI'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 TRSI:
cost_of_equity (10.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-1.48) + risk_adjustments (6.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.