H.TO
Hydro One Ltd
Price:  
52.28 
CAD
Volume:  
133,620.00
Canada | Electric Utilities
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

H.TO WACC - Weighted Average Cost of Capital

The WACC of Hydro One Ltd (H.TO) is 5.3%.

The Cost of Equity of Hydro One Ltd (H.TO) is 6.30%.
The Cost of Debt of Hydro One Ltd (H.TO) is 4.25%.

Range Selected
Cost of equity 5.50% - 7.10% 6.30%
Tax rate 14.90% - 17.80% 16.35%
Cost of debt 4.00% - 4.50% 4.25%
WACC 4.8% - 5.9% 5.3%
WACC

H.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.47 0.49
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.50% 7.10%
Tax rate 14.90% 17.80%
Debt/Equity ratio 0.56 0.56
Cost of debt 4.00% 4.50%
After-tax WACC 4.8% 5.9%
Selected WACC 5.3%

H.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 H.TO:

cost_of_equity (6.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.