CTF.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Citadel Income Fund (CTF.UN.TO) is 6.4%.

The Cost of Equity of Citadel Income Fund (CTF.UN.TO) is 8.60%.

The Cost of Debt of Citadel Income Fund (CTF.UN.TO) is 4.25%.

	Range	Selected
Cost of equity	6.20% - 11.00%	8.60%
Tax rate	0.40% - 1.10%	0.75%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.1% - 7.7%	6.4%

WACC

CTF.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.6	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	11.00%

Tax rate	0.40%	1.10%
Debt/Equity ratio	1	1
Cost of debt	4.00%	4.50%

After-tax WACC	5.1%	7.7%


Selected WACC	6.4%

CTF.UN.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 CTF.UN.TO:

cost_of_equity (8.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.6) + 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.