CET.TO WACC - Weighted Average Cost of Capital

The WACC of Cathedral Energy Services Ltd (CET.TO) is 8.7%.

The Cost of Equity of Cathedral Energy Services Ltd (CET.TO) is 9.60%.

The Cost of Debt of Cathedral Energy Services Ltd (CET.TO) is 7.95%.

	Range	Selected
Cost of equity	8.30% - 10.90%	9.60%
Tax rate	6.50% - 13.50%	10.00%
Cost of debt	4.40% - 11.50%	7.95%
WACC	6.9% - 10.6%	8.7%

WACC

CET.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.30%	10.90%

Tax rate	6.50%	13.50%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.40%	11.50%

After-tax WACC	6.9%	10.6%


Selected WACC	8.7%

CET.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 CET.TO:

cost_of_equity (9.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1) + 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.