ALC.TO WACC - Weighted Average Cost of Capital
The WACC of Algoma Central Corp (ALC.TO) is 6.9%.
| Range | Selected | |
| Cost of equity | 7.2% - 9.5% | 8.35% |
| Tax rate | 15.7% - 15.8% | 15.75% |
| Cost of debt | 4.8% - 6.3% | 5.55% |
| WACC | 6.0% - 7.9% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.79 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.2% | 9.5% |
| Tax rate | 15.7% | 15.8% |
| Debt/Equity ratio | 0.63 | 0.63 |
| Cost of debt | 4.8% | 6.3% |
| After-tax WACC | 6.0% | 7.9% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALC.TO | Algoma Central Corp | 0.63 | 0.58 | 0.38 |
| CMRE | Costamare Inc | 1.86 | 0.11 | 0.04 |
| DAC | Danaos Corp | 0.45 | 0.8 | 0.58 |
| EGLE | Eagle Bulk Shipping Inc | 0.61 | 1.09 | 0.72 |
| GNK | Genco Shipping & Trading Ltd | 0.15 | 1.16 | 1.03 |
| GRIN | Grindrod Shipping Holdings Ltd | 0.76 | 0 | 0 |
| GSL | Global Ship Lease Inc | 0.72 | 0.96 | 0.6 |
| NM | Navios Maritime Holdings Inc | 13.21 | 0.01 | 0 |
| NMM | Navios Maritime Partners LP | 1.91 | 1.32 | 0.51 |
| PANL | Pangaea Logistics Solutions Ltd | 1.26 | 1.03 | 0.5 |
| Low | High | |
| Unlevered beta | 0.45 | 0.54 |
| Relevered beta | 0.69 | 0.82 |
| Adjusted relevered beta | 0.79 | 0.88 |
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 (8.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.79) + 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.