CNR.TO
Canadian National Railway Co
Price:  
143.93 
CAD
Volume:  
862,055.00
Canada | Road & Rail
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CNR.TO WACC - Weighted Average Cost of Capital

The WACC of Canadian National Railway Co (CNR.TO) is 7.6%.

The Cost of Equity of Canadian National Railway Co (CNR.TO) is 8.50%.
The Cost of Debt of Canadian National Railway Co (CNR.TO) is 4.40%.

Range Selected
Cost of equity 7.30% - 9.70% 8.50%
Tax rate 23.50% - 24.10% 23.80%
Cost of debt 4.20% - 4.60% 4.40%
WACC 6.6% - 8.6% 7.6%
WACC

CNR.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.82 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 9.70%
Tax rate 23.50% 24.10%
Debt/Equity ratio 0.23 0.23
Cost of debt 4.20% 4.60%
After-tax WACC 6.6% 8.6%
Selected WACC 7.6%

CNR.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 CNR.TO:

cost_of_equity (8.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.82) + 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.