LCFS.TO WACC - Weighted Average Cost of Capital

The WACC of Tidewater Renewables Ltd (LCFS.TO) is 6.5%.

The Cost of Equity of Tidewater Renewables Ltd (LCFS.TO) is 7.60%.

The Cost of Debt of Tidewater Renewables Ltd (LCFS.TO) is 8.30%.

	Range	Selected
Cost of equity	5.70% - 9.50%	7.60%
Tax rate	28.40% - 30.20%	29.30%
Cost of debt	6.80% - 9.80%	8.30%
WACC	5.2% - 7.9%	6.5%

WACC

LCFS.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.5	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	9.50%

Tax rate	28.40%	30.20%
Debt/Equity ratio	1.53	1.53
Cost of debt	6.80%	9.80%

After-tax WACC	5.2%	7.9%


Selected WACC	6.5%

LCFS.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 LCFS.TO:

cost_of_equity (7.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.5) + 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.