The WACC of Granite Ridge Resources Inc (GRNT) is 5.6%.
| Range | Selected | |
| Cost of equity | 5.00% - 6.80% | 5.90% |
| Tax rate | 15.80% - 23.60% | 19.70% |
| Cost of debt | 6.10% - 6.10% | 6.10% |
| WACC | 5.1% - 6.1% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.07 | 0.08 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.00% | 6.80% |
| Tax rate | 15.80% | 23.60% |
| Debt/Equity ratio | 0.53 | 0.53 |
| Cost of debt | 6.10% | 6.10% |
| After-tax WACC | 5.1% | 6.1% |
| Selected WACC | 5.6% | |
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 GRNT:
cost_of_equity (5.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.07) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.