LB.TO WACC - Weighted Average Cost of Capital

The WACC of Laurentian Bank of Canada (LB.TO) is 4.7%.

The Cost of Equity of Laurentian Bank of Canada (LB.TO) is 13.55%.

The Cost of Debt of Laurentian Bank of Canada (LB.TO) is 5.00%.

	Range	Selected
Cost of equity	7.50% - 19.60%	13.55%
Tax rate	16.30% - 19.20%	17.75%
Cost of debt	5.00% - 5.00%	5.00%
WACC	4.4% - 5.0%	4.7%

WACC

LB.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.85	2.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	19.60%

Tax rate	16.30%	19.20%
Debt/Equity ratio	14.79	14.79
Cost of debt	5.00%	5.00%

After-tax WACC	4.4%	5.0%


Selected WACC	4.7%

LB.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 LB.TO:

cost_of_equity (13.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.85) + 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.