DR.TO WACC - Weighted Average Cost of Capital

The WACC of Medical Facilities Corp (DR.TO) is 7.5%.

The Cost of Equity of Medical Facilities Corp (DR.TO) is 9.25%.

The Cost of Debt of Medical Facilities Corp (DR.TO) is 4.90%.

	Range	Selected
Cost of equity	7.80% - 10.70%	9.25%
Tax rate	10.90% - 13.60%	12.25%
Cost of debt	4.00% - 5.80%	4.90%
WACC	6.3% - 8.7%	7.5%

WACC

DR.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.9	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	10.70%

Tax rate	10.90%	13.60%
Debt/Equity ratio	0.56	0.56
Cost of debt	4.00%	5.80%

After-tax WACC	6.3%	8.7%


Selected WACC	7.5%

DR.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 DR.TO:

cost_of_equity (9.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.9) + 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.