TVE.TO WACC - Weighted Average Cost of Capital

The WACC of Tamarack Valley Energy Ltd (TVE.TO) is 6.8%.

The Cost of Equity of Tamarack Valley Energy Ltd (TVE.TO) is 6.60%.

The Cost of Debt of Tamarack Valley Energy Ltd (TVE.TO) is 11.50%.

	Range	Selected
Cost of equity	5.20% - 8.00%	6.60%
Tax rate	22.50% - 23.40%	22.95%
Cost of debt	8.10% - 14.90%	11.50%
WACC	5.3% - 8.3%	6.8%

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	-0.08	0.22

Additional risk adjustments	2.5%	3.0%
Cost of equity	5.20%	8.00%

Tax rate	22.50%	23.40%
Debt/Equity ratio	0.11	0.11
Cost of debt	8.10%	14.90%

After-tax WACC	5.3%	8.3%


Selected WACC	6.8%

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 (6.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (-0.08) + risk_adjustments (2.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.