AT WACC - Weighted Average Cost of Capital

The WACC of Atlantic Power Corp (AT) is 6.3%.

The Cost of Equity of Atlantic Power Corp (AT) is 6.15%.

The Cost of Debt of Atlantic Power Corp (AT) is 9.25%.

	Range	Selected
Cost of equity	5.10% - 7.20%	6.15%
Tax rate	21.80% - 36.90%	29.35%
Cost of debt	5.90% - 12.60%	9.25%
WACC	4.8% - 7.7%	6.3%

WACC

AT WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	4.2%	5.2%
Adjusted beta	0.45	0.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	7.20%

Tax rate	21.80%	36.90%
Debt/Equity ratio	2.08	2.08
Cost of debt	5.90%	12.60%

After-tax WACC	4.8%	7.7%


Selected WACC	6.3%

AT'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 AT:

cost_of_equity (6.15%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.45) + 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.