ARR.TO WACC - Weighted Average Cost of Capital

The WACC of Altius Renewable Royalties Corp (ARR.TO) is 7.3%.

The Cost of Equity of Altius Renewable Royalties Corp (ARR.TO) is 10.55%.

The Cost of Debt of Altius Renewable Royalties Corp (ARR.TO) is 5.00%.

	Range	Selected
Cost of equity	7.70% - 13.40%	10.55%
Tax rate	16.40% - 22.50%	19.45%
Cost of debt	5.00% - 5.00%	5.00%
WACC	5.9% - 8.6%	7.3%

WACC

ARR.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.89	1.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	13.40%

Tax rate	16.40%	22.50%
Debt/Equity ratio	1	1
Cost of debt	5.00%	5.00%

After-tax WACC	5.9%	8.6%


Selected WACC	7.3%

ARR.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 ARR.TO:

cost_of_equity (10.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.89) + 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.