The WACC of AcuityAds Holdings Inc (AT.TO) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.40% - 7.50% | 6.45% |
| Tax rate | 25.90% - 26.50% | 26.20% |
| Cost of debt | 4.50% - 7.00% | 5.75% |
| WACC | 5.3% - 7.3% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.6% | 4.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.34 | 0.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.40% | 7.50% |
| Tax rate | 25.90% | 26.50% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 4.50% | 7.00% |
| After-tax WACC | 5.3% | 7.3% |
| Selected WACC | 6.3% | |
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 AT.TO:
cost_of_equity (6.45%) = risk_free_rate (3.85%) + equity_risk_premium (6.00%) * adjusted_beta (0.34) + 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.