AQN.TO WACC - Weighted Average Cost of Capital

The WACC of Algonquin Power & Utilities Corp (AQN.TO) is 3.9%.

The Cost of Equity of Algonquin Power & Utilities Corp (AQN.TO) is 5.45%.

The Cost of Debt of Algonquin Power & Utilities Corp (AQN.TO) is 4.60%.

	Range	Selected
Cost of equity	4.60% - 6.30%	5.45%
Tax rate	30.70% - 42.30%	36.50%
Cost of debt	4.40% - 4.80%	4.60%
WACC	3.7% - 4.2%	3.9%

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	0.28	0.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.60%	6.30%

Tax rate	30.70%	42.30%
Debt/Equity ratio	1.49	1.49
Cost of debt	4.40%	4.80%

After-tax WACC	3.7%	4.2%


Selected WACC	3.9%

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 (5.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.28) + 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.