FTT.TO WACC - Weighted Average Cost of Capital

The WACC of Finning International Inc (FTT.TO) is 7.4%.

The Cost of Equity of Finning International Inc (FTT.TO) is 8.45%.

The Cost of Debt of Finning International Inc (FTT.TO) is 5.05%.

	Range	Selected
Cost of equity	6.90% - 10.00%	8.45%
Tax rate	24.20% - 24.90%	24.55%
Cost of debt	4.40% - 5.70%	5.05%
WACC	6.1% - 8.7%	7.4%

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	0.73	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.00%

Tax rate	24.20%	24.90%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.40%	5.70%

After-tax WACC	6.1%	8.7%


Selected WACC	7.4%

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 (8.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.73) + 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.