EFN.TO
Element Fleet Management Corp
Price:  
32.79 
CAD
Volume:  
173,705
Canada | Diversified Financial Services

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 6.55%.
The Cost of Debt of Element Fleet Management Corp (EFN.TO) is 12.6%.

RangeSelected
Cost of equity5.6% - 7.5%6.55%
Tax rate22.7% - 23.7%23.2%
Cost of debt5.0% - 20.2%12.6%
WACC4.9% - 10.6%7.7%
WACC

EFN.TO WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium5.1%6.1%
Adjusted beta0.470.54
Additional risk adjustments0.0%0.5%
Cost of equity5.6%7.5%
Tax rate22.7%23.7%
Debt/Equity ratio
0.650.65
Cost of debt5.0%20.2%
After-tax WACC4.9%10.6%
Selected WACC7.7%

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 (6.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.