The WACC of Cannlabs Inc (CANL) is 8.6%.
| Range | Selected | |
| Cost of equity | 5.20% - 159.50% | 82.35% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 16.40% | 11.70% |
| WACC | 5.2% - 12.1% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -5.8 | 22.62 |
| Additional risk adjustments | 28.0% | 28.5% |
| Cost of equity | 5.20% | 159.50% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 2010.34 | 2010.34 |
| Cost of debt | 7.00% | 16.40% |
| After-tax WACC | 5.2% | 12.1% |
| Selected WACC | 8.6% | |
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 CANL:
cost_of_equity (82.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-5.8) + risk_adjustments (28.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.