FN.BK WACC - Weighted Average Cost of Capital

The WACC of FN Factory Outlet PCL (FN.BK) is 5.3%.

The Cost of Equity of FN Factory Outlet PCL (FN.BK) is 5.80%.

The Cost of Debt of FN Factory Outlet PCL (FN.BK) is 4.25%.

	Range	Selected
Cost of equity	5.00% - 6.60%	5.80%
Tax rate	18.50% - 20.20%	19.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.6% - 6.0%	5.3%

WACC

FN.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.33	0.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	6.60%

Tax rate	18.50%	20.20%
Debt/Equity ratio	0.25	0.25
Cost of debt	4.00%	4.50%

After-tax WACC	4.6%	6.0%


Selected WACC	5.3%

FN.BK'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 FN.BK:

cost_of_equity (5.80%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.33) + 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.