EFN.TO WACC - Weighted Average Cost of Capital

The WACC of Element Fleet Management Corp (EFN.TO) is 7.7%.

The Cost of Equity of Element Fleet Management Corp (EFN.TO) is 6.40%.

The Cost of Debt of Element Fleet Management Corp (EFN.TO) is 12.60%.

	Range	Selected
Cost of equity	5.50% - 7.30%	6.40%
Tax rate	22.70% - 23.70%	23.20%
Cost of debt	5.00% - 20.20%	12.60%
WACC	4.9% - 10.4%	7.7%

WACC

EFN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.46	0.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.30%

Tax rate	22.70%	23.70%
Debt/Equity ratio	0.64	0.64
Cost of debt	5.00%	20.20%

After-tax WACC	4.9%	10.4%


Selected WACC	7.7%

EFN.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 EFN.TO:

cost_of_equity (6.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.