EMP.A.TO WACC - Weighted Average Cost of Capital

The WACC of Empire Company Ltd (EMP.A.TO) is 5.9%.

The Cost of Equity of Empire Company Ltd (EMP.A.TO) is 7.55%.

The Cost of Debt of Empire Company Ltd (EMP.A.TO) is 4.45%.

	Range	Selected
Cost of equity	6.40% - 8.70%	7.55%
Tax rate	25.50% - 25.80%	25.65%
Cost of debt	4.00% - 4.90%	4.45%
WACC	5.1% - 6.7%	5.9%

WACC

EMP.A.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.63	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	8.70%

Tax rate	25.50%	25.80%
Debt/Equity ratio	0.62	0.62
Cost of debt	4.00%	4.90%

After-tax WACC	5.1%	6.7%


Selected WACC	5.9%

EMP.A.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 EMP.A.TO:

cost_of_equity (7.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.63) + 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.