EDT.TO
Spectral Medical Inc
Price:  
0.83 
CAD
Volume:  
128,319.00
Canada | Biotechnology
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EDT.TO WACC - Weighted Average Cost of Capital

The WACC of Spectral Medical Inc (EDT.TO) is 8.5%.

The Cost of Equity of Spectral Medical Inc (EDT.TO) is 8.75%.
The Cost of Debt of Spectral Medical Inc (EDT.TO) is 5.50%.

Range Selected
Cost of equity 7.40% - 10.10% 8.75%
Tax rate 25.90% - 26.50% 26.20%
Cost of debt 4.00% - 7.00% 5.50%
WACC 7.1% - 9.8% 8.5%
WACC

EDT.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 0.98
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 10.10%
Tax rate 25.90% 26.50%
Debt/Equity ratio 0.06 0.06
Cost of debt 4.00% 7.00%
After-tax WACC 7.1% 9.8%
Selected WACC 8.5%

EDT.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 EDT.TO:

cost_of_equity (8.75%) = 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.