The WACC of Torex Gold Resources Inc (TXG.TO) is 9.3%.
| Range | Selected | |
| Cost of equity | 8.00% - 10.70% | 9.35% |
| Tax rate | 36.30% - 39.40% | 37.85% |
| Cost of debt | 4.00% - 23.10% | 13.55% |
| WACC | 7.7% - 10.9% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.95 | 1.07 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 10.70% |
| Tax rate | 36.30% | 39.40% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 4.00% | 23.10% |
| After-tax WACC | 7.7% | 10.9% |
| Selected WACC | 9.3% | |
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 TXG.TO:
cost_of_equity (9.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.95) + 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.