CFP.TO WACC - Weighted Average Cost of Capital

The WACC of Canfor Corp (CFP.TO) is 6.6%.

The Cost of Equity of Canfor Corp (CFP.TO) is 7.20%.

The Cost of Debt of Canfor Corp (CFP.TO) is 7.10%.

	Range	Selected
Cost of equity	5.40% - 9.00%	7.20%
Tax rate	22.80% - 23.90%	23.35%
Cost of debt	7.00% - 7.20%	7.10%
WACC	5.4% - 7.7%	6.6%

WACC

CFP.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.45	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	9.00%

Tax rate	22.80%	23.90%
Debt/Equity ratio	0.58	0.58
Cost of debt	7.00%	7.20%

After-tax WACC	5.4%	7.7%


Selected WACC	6.6%

CFP.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 CFP.TO:

cost_of_equity (7.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.45) + 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.