CERV.TO WACC - Weighted Average Cost of Capital

The WACC of Cervus Equipment Corp (CERV.TO) is 8.3%.

The Cost of Equity of Cervus Equipment Corp (CERV.TO) is 11.10%.

The Cost of Debt of Cervus Equipment Corp (CERV.TO) is 4.65%.

	Range	Selected
Cost of equity	9.70% - 12.50%	11.10%
Tax rate	25.20% - 27.00%	26.10%
Cost of debt	4.60% - 4.70%	4.65%
WACC	7.4% - 9.1%	8.3%

WACC

CERV.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	1.34	1.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	12.50%

Tax rate	25.20%	27.00%
Debt/Equity ratio	0.59	0.59
Cost of debt	4.60%	4.70%

After-tax WACC	7.4%	9.1%


Selected WACC	8.3%

CERV.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 CERV.TO:

cost_of_equity (11.10%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (1.34) + 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.