The WACC of Guardian Capital Group Ltd (GCG.TO) is 7.7%.
| Range | Selected | |
| Cost of equity | 6.70% - 9.30% | 8.00% |
| Tax rate | 13.70% - 14.50% | 14.10% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.5% - 8.8% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.4% | 2.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.91 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 9.30% |
| Tax rate | 13.70% | 14.50% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.5% | 8.8% |
| Selected WACC | 7.7% | |
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 GCG.TO:
cost_of_equity (8.00%) = risk_free_rate (2.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.91) + 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.