FAR.TO WACC - Weighted Average Cost of Capital

The WACC of Foraco International SA (FAR.TO) is 8.5%.

The Cost of Equity of Foraco International SA (FAR.TO) is 10.40%.

The Cost of Debt of Foraco International SA (FAR.TO) is 6.85%.

	Range	Selected
Cost of equity	8.70% - 12.10%	10.40%
Tax rate	25.20% - 26.20%	25.70%
Cost of debt	4.60% - 9.10%	6.85%
WACC	6.8% - 10.2%	8.5%

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	1.08	1.3

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	12.10%

Tax rate	25.20%	26.20%
Debt/Equity ratio	0.56	0.56
Cost of debt	4.60%	9.10%

After-tax WACC	6.8%	10.2%


Selected WACC	8.5%

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 (10.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.08) + 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.