ALA.TO WACC - Weighted Average Cost of Capital

The WACC of AltaGas Ltd (ALA.TO) is 5.3%.

The Cost of Equity of AltaGas Ltd (ALA.TO) is 6.50%.

The Cost of Debt of AltaGas Ltd (ALA.TO) is 4.70%.

	Range	Selected
Cost of equity	5.70% - 7.30%	6.50%
Tax rate	19.40% - 21.50%	20.45%
Cost of debt	4.00% - 5.40%	4.70%
WACC	4.6% - 5.9%	5.3%

WACC

ALA.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.49	0.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	7.30%

Tax rate	19.40%	21.50%
Debt/Equity ratio	0.79	0.79
Cost of debt	4.00%	5.40%

After-tax WACC	4.6%	5.9%


Selected WACC	5.3%

ALA.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 ALA.TO:

cost_of_equity (6.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.49) + 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.