RE.V WACC - Weighted Average Cost of Capital

The WACC of RE Royalties Ltd (RE.V) is 7.4%.

The Cost of Equity of RE Royalties Ltd (RE.V) is 7.25%.

The Cost of Debt of RE Royalties Ltd (RE.V) is 7.90%.

	Range	Selected
Cost of equity	6.20% - 8.30%	7.25%
Tax rate	2.50% - 8.60%	5.55%
Cost of debt	7.00% - 8.80%	7.90%
WACC	6.6% - 8.1%	7.4%

WACC

RE.V WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.46	0.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	8.30%

Tax rate	2.50%	8.60%
Debt/Equity ratio	2.04	2.04
Cost of debt	7.00%	8.80%

After-tax WACC	6.6%	8.1%


Selected WACC	7.4%

RE.V'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 RE.V:

cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.