VET.TO WACC - Weighted Average Cost of Capital

The WACC of Vermilion Energy Inc (VET.TO) is 7.6%.

The Cost of Equity of Vermilion Energy Inc (VET.TO) is 9.70%.

The Cost of Debt of Vermilion Energy Inc (VET.TO) is 6.15%.

	Range	Selected
Cost of equity	8.30% - 11.10%	9.70%
Tax rate	18.30% - 25.90%	22.10%
Cost of debt	6.00% - 6.30%	6.15%
WACC	6.9% - 8.3%	7.6%

WACC

VET.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	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	11.10%

Tax rate	18.30%	25.90%
Debt/Equity ratio	0.75	0.75
Cost of debt	6.00%	6.30%

After-tax WACC	6.9%	8.3%


Selected WACC	7.6%

VET.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 VET.TO:

cost_of_equity (9.70%) = 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.