TVE.TO WACC - Weighted Average Cost of Capital

The WACC of Tamarack Valley Energy Ltd (TVE.TO) is 10.0%.

The Cost of Equity of Tamarack Valley Energy Ltd (TVE.TO) is 9.55%.

The Cost of Debt of Tamarack Valley Energy Ltd (TVE.TO) is 15.80%.

	Range	Selected
Cost of equity	8.30% - 10.80%	9.55%
Tax rate	22.50% - 23.40%	22.95%
Cost of debt	8.40% - 23.20%	15.80%
WACC	8.0% - 11.9%	10.0%

WACC

TVE.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.01	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	10.80%

Tax rate	22.50%	23.40%
Debt/Equity ratio	0.2	0.2
Cost of debt	8.40%	23.20%

After-tax WACC	8.0%	11.9%


Selected WACC	10.0%

TVE.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 TVE.TO:

cost_of_equity (9.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.01) + 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.