IPL.TO WACC - Weighted Average Cost of Capital

The WACC of Inter Pipeline Ltd (IPL.TO) is 6.8%.

The Cost of Equity of Inter Pipeline Ltd (IPL.TO) is 8.60%.

The Cost of Debt of Inter Pipeline Ltd (IPL.TO) is 6.10%.

	Range	Selected
Cost of equity	6.90% - 10.30%	8.60%
Tax rate	24.00% - 24.90%	24.45%
Cost of debt	4.00% - 8.20%	6.10%
WACC	5.1% - 8.4%	6.8%

WACC

IPL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.75	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.30%

Tax rate	24.00%	24.90%
Debt/Equity ratio	0.84	0.84
Cost of debt	4.00%	8.20%

After-tax WACC	5.1%	8.4%


Selected WACC	6.8%

IPL.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 IPL.TO:

cost_of_equity (8.60%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.75) + 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.