The WACC of FG Acquisition Corp (FGAA.U.TO) is 15.0%.
Range | Selected | |
Cost of equity | 23.6% - 29.1% | 26.35% |
Tax rate | 25.9% - 26.5% | 26.2% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 13.7% - 16.4% | 15.0% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 4.45 | 4.45 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 23.6% | 29.1% |
Tax rate | 25.9% | 26.5% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 13.7% | 16.4% |
Selected WACC | 15.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FGAA.U.TO | FG Acquisition Corp | 0.05 | 3.55 | 3.42 |
Low | High | |
Unlevered beta | 3.42 | 3.42 |
Relevered beta | 6.15 | 6.15 |
Adjusted relevered beta | 4.45 | 4.45 |
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 FGAA.U.TO:
cost_of_equity (26.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.10%) * adjusted_beta (4.45) + 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.