FTT.TO WACC - Weighted Average Cost of Capital

The WACC of Finning International Inc (FTT.TO) is 7.8%.

The Cost of Equity of Finning International Inc (FTT.TO) is 8.65%.

The Cost of Debt of Finning International Inc (FTT.TO) is 5.25%.

	Range	Selected
Cost of equity	7.50% - 9.80%	8.65%
Tax rate	24.60% - 25.30%	24.95%
Cost of debt	4.40% - 6.10%	5.25%
WACC	6.8% - 8.9%	7.8%

WACC

FTT.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.85	0.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	9.80%

Tax rate	24.60%	25.30%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.40%	6.10%

After-tax WACC	6.8%	8.9%


Selected WACC	7.8%

FTT.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 FTT.TO:

cost_of_equity (8.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.85) + 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.