The WACC of Colabor Group Inc (GCL.TO) is 8.8%.
| Range | Selected | |
| Cost of equity | 5.50% - 8.00% | 6.75% |
| Tax rate | 26.10% - 28.00% | 27.05% |
| Cost of debt | 14.90% - 14.90% | 14.90% |
| WACC | 8.3% - 9.4% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.46 | 0.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.50% | 8.00% |
| Tax rate | 26.10% | 28.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 14.90% | 14.90% |
| After-tax WACC | 8.3% | 9.4% |
| Selected WACC | 8.8% | |
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 GCL.TO:
cost_of_equity (6.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.