Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.68	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.0%	9.3%

Tax rate	17.4%	18.3%
Debt/Equity ratio	0.2	0.2
Cost of debt	4.5%	5.2%

After-tax WACC	6.4%	8.5%


Selected WACC	7.4%

CF WACC - Detailed calculations of Beta

		Debt/Equity		Unlevered
Peers	Company Name	ratio	Beta	beta

CF	CF Industries Holdings Inc	0.2	0.39	0.34
ALB	Albemarle Corp	0.52	1.49	1.04
ASH	Ashland Global Holdings Inc.	0.58	0.95	0.64
AVD	American Vanguard Corp	1.17	0.89	0.46
FMC	FMC Corp	0.7	0.89	0.57
IFOS.V	Itafos	0.36	0.03	0.03
MOS	Mosaic Co	0.38	1.14	0.87
OLN	Olin Corp	1.28	1.37	0.67
SMG	Scotts Miracle-Gro Co	0.65	0.45	0.29
UAN	CVR Partners LP	0.66	0.65	0.43

	Low	High

Unlevered beta	0.44	0.6
Relevered beta	0.52	0.7
Adjusted relevered beta	0.68	0.8

CF'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 CF:

cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.