CNE.TO WACC - Weighted Average Cost of Capital

The WACC of Canacol Energy Ltd (CNE.TO) is 8.2%.

The Cost of Equity of Canacol Energy Ltd (CNE.TO) is 51.65%.

The Cost of Debt of Canacol Energy Ltd (CNE.TO) is 7.10%.

	Range	Selected
Cost of equity	36.50% - 66.80%	51.65%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	6.80% - 7.40%	7.10%
WACC	7.0% - 9.3%	8.2%

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	6.55	10.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	36.50%	66.80%

Tax rate	25.90%	26.50%
Debt/Equity ratio	14.84	14.84
Cost of debt	6.80%	7.40%

After-tax WACC	7.0%	9.3%


Selected WACC	8.2%

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 (51.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (6.55) + 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.