LABS.TO WACC - Weighted Average Cost of Capital

The WACC of Medipharm Labs Corp (LABS.TO) is 8.7%.

The Cost of Equity of Medipharm Labs Corp (LABS.TO) is 8.60%.

The Cost of Debt of Medipharm Labs Corp (LABS.TO) is 12.50%.

	Range	Selected
Cost of equity	6.90% - 10.30%	8.60%
Tax rate	0.10% - 0.90%	0.50%
Cost of debt	7.00% - 18.00%	12.50%
WACC	6.9% - 10.4%	8.7%

WACC

LABS.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.73	1.01

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

Tax rate	0.10%	0.90%
Debt/Equity ratio	0.01	0.01
Cost of debt	7.00%	18.00%

After-tax WACC	6.9%	10.4%


Selected WACC	8.7%

LABS.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 LABS.TO:

cost_of_equity (8.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.73) + 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.