IPL.TO WACC - Weighted Average Cost of Capital
The WACC of Inter Pipeline Ltd (IPL.TO) is 6.8%.
| Range | Selected | |
| Cost of equity | 6.9% - 10.3% | 8.6% |
| Tax rate | 24.0% - 24.9% | 24.45% |
| Cost of debt | 4.0% - 8.2% | 6.1% |
| WACC | 5.1% - 8.4% | 6.8% |
| 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 | 6.9% | 10.3% |
| Tax rate | 24.0% | 24.9% |
| Debt/Equity ratio | 0.84 | 0.84 |
| Cost of debt | 4.0% | 8.2% |
| After-tax WACC | 5.1% | 8.4% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IPL.TO | Inter Pipeline Ltd | 0.84 | 2.22 | 1.36 |
| DHT | DHT Holdings Inc | 0.23 | 0.62 | 0.53 |
| HEP | Holly Energy Partners LP | 0.63 | 0.43 | 0.29 |
| MMP | Magellan Midstream Partners LP | 0.36 | 0.73 | 0.57 |
| NS | NuStar Energy LP | 1.23 | 0.57 | 0.29 |
| PSXP | Phillips 66 Partners LP | 0.41 | 0.97 | 0.74 |
| SHLX | Shell Midstream Partners LP | 0.44 | 1.21 | 0.91 |
| STNG | Scorpio Tankers Inc | 0.39 | 0.69 | 0.53 |
| TGP | Teekay LNG Partners LP | 1.91 | 1.14 | 0.46 |
| TK | Teekay Corp | 1.14 | 0.81 | 0.43 |
| TNK | Teekay Tankers Ltd | 0.87 | 0.74 | 0.44 |
| Low | High | |
| Unlevered beta | 0.46 | 0.53 |
| Relevered beta | 0.63 | 1.06 |
| Adjusted relevered beta | 0.75 | 1.04 |
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.