GWO.TO
Great-West Lifeco Inc
Price:  
52.21 
CAD
Volume:  
84,440.00
Canada | Insurance
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GWO.TO WACC - Weighted Average Cost of Capital

The WACC of Great-West Lifeco Inc (GWO.TO) is 7.8%.

The Cost of Equity of Great-West Lifeco Inc (GWO.TO) is 8.40%.
The Cost of Debt of Great-West Lifeco Inc (GWO.TO) is 5.00%.

Range Selected
Cost of equity 7.30% - 9.50% 8.40%
Tax rate 5.80% - 8.60% 7.20%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.8% - 8.7% 7.8%
WACC

GWO.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.81 0.88
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 9.50%
Tax rate 5.80% 8.60%
Debt/Equity ratio 0.21 0.21
Cost of debt 5.00% 5.00%
After-tax WACC 6.8% 8.7%
Selected WACC 7.8%

GWO.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 GWO.TO:

cost_of_equity (8.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.81) + 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.