CFX.TO WACC - Weighted Average Cost of Capital

The WACC of Canfor Pulp Products Inc (CFX.TO) is 9.3%.

The Cost of Equity of Canfor Pulp Products Inc (CFX.TO) is 8.75%.

The Cost of Debt of Canfor Pulp Products Inc (CFX.TO) is 13.15%.

	Range	Selected
Cost of equity	6.00% - 11.50%	8.75%
Tax rate	27.00% - 27.10%	27.05%
Cost of debt	11.40% - 14.90%	13.15%
WACC	7.6% - 11.1%	9.3%

WACC

CFX.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.55	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	11.50%

Tax rate	27.00%	27.10%
Debt/Equity ratio	2.47	2.47
Cost of debt	11.40%	14.90%

After-tax WACC	7.6%	11.1%


Selected WACC	9.3%

CFX.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 CFX.TO:

cost_of_equity (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.55) + 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.