FN.TO WACC - Weighted Average Cost of Capital

The WACC of First National Financial Corp (FN.TO) is 10.2%.

The Cost of Equity of First National Financial Corp (FN.TO) is 14.90%.

The Cost of Debt of First National Financial Corp (FN.TO) is 13.60%.

	Range	Selected
Cost of equity	8.10% - 21.70%	14.90%
Tax rate	26.50% - 26.50%	26.50%
Cost of debt	4.00% - 23.20%	13.60%
WACC	3.2% - 17.2%	10.2%

WACC

FN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.97	2.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	21.70%

Tax rate	26.50%	26.50%
Debt/Equity ratio	22.04	22.04
Cost of debt	4.00%	23.20%

After-tax WACC	3.2%	17.2%


Selected WACC	10.2%

FN.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 FN.TO:

cost_of_equity (14.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.97) + 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.