TXP.TO WACC - Weighted Average Cost of Capital

The WACC of Touchstone Exploration Inc (TXP.TO) is 10.2%.

The Cost of Equity of Touchstone Exploration Inc (TXP.TO) is 9.10%.

The Cost of Debt of Touchstone Exploration Inc (TXP.TO) is 15.55%.

	Range	Selected
Cost of equity	6.90% - 11.30%	9.10%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	7.90% - 23.20%	15.55%
WACC	6.4% - 14.0%	10.2%

WACC

TXP.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.74	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	11.30%

Tax rate	25.90%	26.50%
Debt/Equity ratio	0.9	0.9
Cost of debt	7.90%	23.20%

After-tax WACC	6.4%	14.0%


Selected WACC	10.2%

TXP.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 TXP.TO:

cost_of_equity (9.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.74) + 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.