The WACC of CIBT Education Group Inc (MBA.TO) is 5.2%.
| Range | Selected | |
| Cost of equity | 3.80% - 9.40% | 6.60% |
| Tax rate | 6.00% - 7.40% | 6.70% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.8% - 6.7% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.6% | 4.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | -0.95 | -0.1 |
| Additional risk adjustments | 5.5% | 6.0% |
| Cost of equity | 3.80% | 9.40% |
| Tax rate | 6.00% | 7.40% |
| Debt/Equity ratio | 11.24 | 11.24 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.8% | 6.7% |
| Selected WACC | 5.2% | |
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 MBA.TO:
cost_of_equity (6.60%) = risk_free_rate (3.85%) + equity_risk_premium (6.00%) * adjusted_beta (-0.95) + risk_adjustments (5.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.