ALA.TO WACC - Weighted Average Cost of Capital

The WACC of AltaGas Ltd (ALA.TO) is 4.8%.

The Cost of Equity of AltaGas Ltd (ALA.TO) is 5.10%.

The Cost of Debt of AltaGas Ltd (ALA.TO) is 5.50%.

	Range	Selected
Cost of equity	4.10% - 6.10%	5.10%
Tax rate	22.20% - 24.00%	23.10%
Cost of debt	4.20% - 6.80%	5.50%
WACC	3.8% - 5.7%	4.8%

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	0.19	0.31

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.10%	6.10%

Tax rate	22.20%	24.00%
Debt/Equity ratio	0.58	0.58
Cost of debt	4.20%	6.80%

After-tax WACC	3.8%	5.7%


Selected WACC	4.8%

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 (5.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.19) + 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.