CNE.TO WACC - Weighted Average Cost of Capital

The WACC of Canacol Energy Ltd (CNE.TO) is 8.3%.

The Cost of Equity of Canacol Energy Ltd (CNE.TO) is 53.00%.

The Cost of Debt of Canacol Energy Ltd (CNE.TO) is 6.40%.

	Range	Selected
Cost of equity	43.60% - 62.40%	53.00%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	5.40% - 7.40%	6.40%
WACC	6.9% - 9.7%	8.3%

WACC

CNE.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	7.93	9.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	43.60%	62.40%

Tax rate	25.90%	26.50%
Debt/Equity ratio	12.43	12.43
Cost of debt	5.40%	7.40%

After-tax WACC	6.9%	9.7%


Selected WACC	8.3%

CNE.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 CNE.TO:

cost_of_equity (53.00%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (7.93) + 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.