CTS.TO WACC - Weighted Average Cost of Capital

The WACC of Converge Technology Solutions Corp (CTS.TO) is 7.6%.

The Cost of Equity of Converge Technology Solutions Corp (CTS.TO) is 7.65%.

The Cost of Debt of Converge Technology Solutions Corp (CTS.TO) is 12.20%.

	Range	Selected
Cost of equity	6.10% - 9.20%	7.65%
Tax rate	27.70% - 45.20%	36.45%
Cost of debt	6.80% - 17.60%	12.20%
WACC	5.9% - 9.3%	7.6%

WACC

CTS.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.58	0.82

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	9.20%

Tax rate	27.70%	45.20%
Debt/Equity ratio	0.27	0.27
Cost of debt	6.80%	17.60%

After-tax WACC	5.9%	9.3%


Selected WACC	7.6%

CTS.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 CTS.TO:

cost_of_equity (7.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.