EIF.TO WACC - Weighted Average Cost of Capital

The WACC of Exchange Income Corp (EIF.TO) is 5.4%.

The Cost of Equity of Exchange Income Corp (EIF.TO) is 6.50%.

The Cost of Debt of Exchange Income Corp (EIF.TO) is 5.60%.

	Range	Selected
Cost of equity	5.20% - 7.80%	6.50%
Tax rate	27.50% - 27.70%	27.60%
Cost of debt	4.90% - 6.30%	5.60%
WACC	4.4% - 6.4%	5.4%

WACC

EIF.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.39	0.6

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.20%	7.80%

Tax rate	27.50%	27.70%
Debt/Equity ratio	0.8	0.8
Cost of debt	4.90%	6.30%

After-tax WACC	4.4%	6.4%


Selected WACC	5.4%

EIF.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 EIF.TO:

cost_of_equity (6.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.39) + 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.