CNE.TO WACC - Weighted Average Cost of Capital

The WACC of Canacol Energy Ltd (CNE.TO) is 8.1%.

The Cost of Equity of Canacol Energy Ltd (CNE.TO) is 43.00%.

The Cost of Debt of Canacol Energy Ltd (CNE.TO) is 6.15%.

	Range	Selected
Cost of equity	36.60% - 49.40%	43.00%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	4.90% - 7.40%	6.15%
WACC	6.6% - 9.5%	8.1%

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	6.56	7.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	36.60%	49.40%

Tax rate	25.90%	26.50%
Debt/Equity ratio	9.93	9.93
Cost of debt	4.90%	7.40%

After-tax WACC	6.6%	9.5%


Selected WACC	8.1%

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 (43.00%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (6.56) + 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.