AT WACC - Weighted Average Cost of Capital
The WACC of Atlantic Power Corp (AT) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.1% - 7.2% | 6.15% |
| Tax rate | 21.8% - 36.9% | 29.35% |
| Cost of debt | 5.9% - 12.6% | 9.25% |
| WACC | 4.8% - 7.7% | 6.3% |
| 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 | 5.1% | 7.2% |
| Tax rate | 21.8% | 36.9% |
| Debt/Equity ratio | 2.08 | 2.08 |
| Cost of debt | 5.9% | 12.6% |
| After-tax WACC | 4.8% | 7.7% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AT | Atlantic Power Corp | 2.08 | 0.14 | 0.05 |
| CPX.TO | Capital Power Corp | 0.59 | 1.12 | 0.79 |
| ETX.TO | Etrion Corp | 3.52 | 0.32 | 0.09 |
| EUSP | EuroSite Power Inc | 0.2 | -0.67 | -0.59 |
| KEN | Kenon Holdings Ltd | 0.62 | 0.89 | 0.61 |
| MXG.TO | Maxim Power Corp | 0 | 1.53 | 1.53 |
| SXI.TO | Synex International Inc | 1.15 | -0.14 | -0.08 |
| KNR1L.VS | Kauno Energija AB | 0.97 | -0.66 | -0.39 |
| Low | High | |
| Unlevered beta | 0.03 | 0.2 |
| Relevered beta | 0.18 | 0.39 |
| Adjusted relevered beta | 0.45 | 0.59 |
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.