BNK.TO WACC - Weighted Average Cost of Capital

The WACC of Big Banc Split Corp (BNK.TO) is 6.9%.

The Cost of Equity of Big Banc Split Corp (BNK.TO) is 19.55%.

The Cost of Debt of Big Banc Split Corp (BNK.TO) is 6.70%.

	Range	Selected
Cost of equity	17.00% - 22.10%	19.55%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	6.40% - 7.00%	6.70%
WACC	6.3% - 7.4%	6.9%

WACC

BNK.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	2.71	2.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.00%	22.10%

Tax rate	25.90%	26.50%
Debt/Equity ratio	6.65	6.65
Cost of debt	6.40%	7.00%

After-tax WACC	6.3%	7.4%


Selected WACC	6.9%

BNK.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 BNK.TO:

cost_of_equity (19.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (2.71) + 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.