ERF.TO
Enerplus Corp
Price:  
26.78 
CAD
Volume:  
362,721
Canada | Oil, Gas & Consumable Fuels

ERF.TO WACC - Weighted Average Cost of Capital

The WACC of Enerplus Corp (ERF.TO) is 7.9%.

The Cost of Equity of Enerplus Corp (ERF.TO) is 8%.
The Cost of Debt of Enerplus Corp (ERF.TO) is 4.5%.

RangeSelected
Cost of equity6.8% - 9.2%8%
Tax rate22.4% - 23.3%22.85%
Cost of debt4.0% - 5.0%4.5%
WACC6.7% - 9.0%7.9%
WACC

ERF.TO WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium5.1%6.1%
Adjusted beta0.720.82
Additional risk adjustments0.0%0.5%
Cost of equity6.8%9.2%
Tax rate22.4%23.3%
Debt/Equity ratio
0.030.03
Cost of debt4.0%5.0%
After-tax WACC6.7%9.0%
Selected WACC7.9%

ERF.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 ERF.TO:

cost_of_equity (8.00%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.72) + 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.