FAR.TO WACC - Weighted Average Cost of Capital

The WACC of Foraco International SA (FAR.TO) is 8.6%.

The Cost of Equity of Foraco International SA (FAR.TO) is 11.20%.

The Cost of Debt of Foraco International SA (FAR.TO) is 6.15%.

	Range	Selected
Cost of equity	9.40% - 13.00%	11.20%
Tax rate	23.00% - 25.00%	24.00%
Cost of debt	4.40% - 7.90%	6.15%
WACC	7.0% - 10.2%	8.6%

WACC

FAR.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.23	1.45

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	13.00%

Tax rate	23.00%	25.00%
Debt/Equity ratio	0.67	0.67
Cost of debt	4.40%	7.90%

After-tax WACC	7.0%	10.2%


Selected WACC	8.6%

FAR.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 FAR.TO:

cost_of_equity (11.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.23) + 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.