LCFS.TO WACC - Weighted Average Cost of Capital

The WACC of Tidewater Renewables Ltd (LCFS.TO) is 5.9%.

The Cost of Equity of Tidewater Renewables Ltd (LCFS.TO) is 5.45%.

The Cost of Debt of Tidewater Renewables Ltd (LCFS.TO) is 9.10%.

	Range	Selected
Cost of equity	4.50% - 6.40%	5.45%
Tax rate	28.40% - 30.20%	29.30%
Cost of debt	8.40% - 9.80%	9.10%
WACC	5.2% - 6.6%	5.9%

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	0.06	0.2

Additional risk adjustments	1.0%	1.5%
Cost of equity	4.50%	6.40%

Tax rate	28.40%	30.20%
Debt/Equity ratio	0.8	0.8
Cost of debt	8.40%	9.80%

After-tax WACC	5.2%	6.6%


Selected WACC	5.9%

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 (5.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.06) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.