The WACC of Corus Entertainment Inc (CJR.B.TO) is 6.8%.
| Range | Selected | |
| Cost of equity | 4.30% - 17.10% | 10.70% |
| Tax rate | 19.30% - 20.00% | 19.65% |
| Cost of debt | 5.30% - 11.70% | 8.50% |
| WACC | 4.3% - 9.4% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -1.64 | 0.57 |
| Additional risk adjustments | 9.5% | 10.0% |
| Cost of equity | 4.30% | 17.10% |
| Tax rate | 19.30% | 20.00% |
| Debt/Equity ratio | 174.38 | 174.38 |
| Cost of debt | 5.30% | 11.70% |
| After-tax WACC | 4.3% | 9.4% |
| Selected WACC | 6.8% | |
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 CJR.B.TO:
cost_of_equity (10.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (-1.64) + risk_adjustments (9.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.