BU.TO WACC - Weighted Average Cost of Capital

The WACC of Burcon NutraScience Corp (BU.TO) is 7.5%.

The Cost of Equity of Burcon NutraScience Corp (BU.TO) is 6.05%.

The Cost of Debt of Burcon NutraScience Corp (BU.TO) is 20.80%.

	Range	Selected
Cost of equity	5.00% - 7.10%	6.05%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	7.00% - 34.60%	20.80%
WACC	5.1% - 10.0%	7.5%

WACC

BU.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.37	0.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	7.10%

Tax rate	25.90%	26.50%
Debt/Equity ratio	0.19	0.19
Cost of debt	7.00%	34.60%

After-tax WACC	5.1%	10.0%


Selected WACC	7.5%

BU.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 BU.TO:

cost_of_equity (6.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.37) + 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.