The WACC of Global Telecom & Utilities Income Fund (HGI.UN.TO) is 4.0%.
Range | Selected | |
Cost of equity | 3.5% - 6.3% | 4.9% |
Tax rate | 26.5% - 26.5% | 26.5% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 3.2% - 4.8% | 4.0% |
Category | Low | High |
Long-term bond rate | 3.4% | 3.9% |
Equity market risk premium | 4.7% | 5.7% |
Adjusted beta | 0.03 | 0.34 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 3.5% | 6.3% |
Tax rate | 26.5% | 26.5% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 3.2% | 4.8% |
Selected WACC | 4.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
HGI.UN.TO | Global Telecom & Utilities Income Fund | 0.94 | 0.98 | 0.58 |
ALDA | Atlantica Inc | 23.79 | -7198.02 | -389.41 |
AVNI | Arvana Inc | 0 | 0.65 | 0.65 |
CLV.V | Canoe Mining Ventures Corp | 1 | -2.39 | -1.38 |
FNDM | Fund.Com Inc | 2.64 | 2.01 | 0.68 |
KRFG | King Resources Inc | 0.93 | -0.75 | -0.45 |
KUR.H.V | Kure Technologies Inc | 0.86 | -3.16 | -1.93 |
Low | High | |
Unlevered beta | -1 | 0.17 |
Relevered beta | -0.45 | 0.01 |
Adjusted relevered beta | 0.03 | 0.34 |
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 HGI.UN.TO:
cost_of_equity (4.90%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.03) + 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.