ALC.TO WACC - Weighted Average Cost of Capital

The WACC of Algoma Central Corp (ALC.TO) is 6.9%.

The Cost of Equity of Algoma Central Corp (ALC.TO) is 8.30%.

The Cost of Debt of Algoma Central Corp (ALC.TO) is 5.55%.

	Range	Selected
Cost of equity	7.10% - 9.50%	8.30%
Tax rate	15.70% - 15.80%	15.75%
Cost of debt	4.80% - 6.30%	5.55%
WACC	5.9% - 7.8%	6.9%

WACC

ALC.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.77	0.87

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.50%

Tax rate	15.70%	15.80%
Debt/Equity ratio	0.64	0.64
Cost of debt	4.80%	6.30%

After-tax WACC	5.9%	7.8%


Selected WACC	6.9%

ALC.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 ALC.TO:

cost_of_equity (8.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.77) + 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.