LNF.TO WACC - Weighted Average Cost of Capital

The WACC of Leon's Furniture Ltd (LNF.TO) is 6.6%.

The Cost of Equity of Leon's Furniture Ltd (LNF.TO) is 7.40%.

The Cost of Debt of Leon's Furniture Ltd (LNF.TO) is 4.50%.

	Range	Selected
Cost of equity	6.30% - 8.50%	7.40%
Tax rate	24.00% - 24.40%	24.20%
Cost of debt	4.10% - 4.90%	4.50%
WACC	5.6% - 7.5%	6.6%

WACC

LNF.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.62	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	8.50%

Tax rate	24.00%	24.40%
Debt/Equity ratio	0.27	0.27
Cost of debt	4.10%	4.90%

After-tax WACC	5.6%	7.5%


Selected WACC	6.6%

LNF.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 LNF.TO:

cost_of_equity (7.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.62) + 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.