AQN.TO
Algonquin Power & Utilities Corp
Price:  
7.74 
CAD
Volume:  
431,161.00
Canada | Multi-Utilities
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AQN.TO WACC - Weighted Average Cost of Capital

The WACC of Algonquin Power & Utilities Corp (AQN.TO) is 4.7%.

The Cost of Equity of Algonquin Power & Utilities Corp (AQN.TO) is 6.80%.
The Cost of Debt of Algonquin Power & Utilities Corp (AQN.TO) is 5.10%.

Range Selected
Cost of equity 5.70% - 7.90% 6.80%
Tax rate 25.00% - 42.20% 33.60%
Cost of debt 4.80% - 5.40% 5.10%
WACC 4.4% - 5.0% 4.7%
WACC

AQN.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.5 0.62
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.70% 7.90%
Tax rate 25.00% 42.20%
Debt/Equity ratio 1.56 1.56
Cost of debt 4.80% 5.40%
After-tax WACC 4.4% 5.0%
Selected WACC 4.7%

AQN.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 AQN.TO:

cost_of_equity (6.80%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.