EXF.TO
EXFO Inc
Price:  
7.80 
CAD
Volume:  
4,600.00
Canada | Communications Equipment
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

EXF.TO WACC - Weighted Average Cost of Capital

The WACC of EXFO Inc (EXF.TO) is 7.6%.

The Cost of Equity of EXFO Inc (EXF.TO) is 8.15%.
The Cost of Debt of EXFO Inc (EXF.TO) is 5.00%.

Range Selected
Cost of equity 6.80% - 9.50% 8.15%
Tax rate 26.50% - 26.50% 26.50%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.4% - 8.8% 7.6%
WACC

EXF.TO WACC calculation

Category Low High
Long-term bond rate 3.4% 3.9%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.73 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 9.50%
Tax rate 26.50% 26.50%
Debt/Equity ratio 0.14 0.14
Cost of debt 5.00% 5.00%
After-tax WACC 6.4% 8.8%
Selected WACC 7.6%

EXF.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 EXF.TO:

cost_of_equity (8.15%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.73) + 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.