AW.UN.TO WACC - Weighted Average Cost of Capital

The WACC of A and W Revenue Royalties Income Fund (AW.UN.TO) is 7.3%.

The Cost of Equity of A and W Revenue Royalties Income Fund (AW.UN.TO) is 7.75%.

The Cost of Debt of A and W Revenue Royalties Income Fund (AW.UN.TO) is 4.25%.

	Range	Selected
Cost of equity	6.70% - 8.80%	7.75%
Tax rate	20.90% - 21.10%	21.00%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.4% - 8.2%	7.3%

WACC

AW.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.7	0.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	8.80%

Tax rate	20.90%	21.10%
Debt/Equity ratio	0.11	0.11
Cost of debt	4.00%	4.50%

After-tax WACC	6.4%	8.2%


Selected WACC	7.3%

AW.UN.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 AW.UN.TO:

cost_of_equity (7.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.7) + 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.