MDA.TO WACC - Weighted Average Cost of Capital
The WACC of MDA Ltd (MDA.TO) is 9.1%.
| Range | Selected | |
| Cost of equity | 8.1% - 10.4% | 9.25% |
| Tax rate | 25.7% - 27.9% | 26.8% |
| Cost of debt | 4.2% - 7.1% | 5.65% |
| WACC | 7.9% - 10.2% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.98 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.1% | 10.4% |
| Tax rate | 25.7% | 27.9% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.2% | 7.1% |
| After-tax WACC | 7.9% | 10.2% |
| Selected WACC | 9.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MDA.TO | MDA Ltd | 0.04 | 1.37 | 1.33 |
| AZ.V | A2Z Smart Technologies Corp | 0.06 | 1.33 | 1.27 |
| BBD.B.TO | Bombardier Inc | 0.85 | 1.61 | 1 |
| CAE.TO | CAE Inc | 0.32 | 1.2 | 0.98 |
| FLT.V | Drone Delivery Canada Corp | 0.01 | 0.5 | 0.5 |
| HRX.TO | Heroux Devtek Inc | 0.2 | 0.21 | 0.18 |
| KWE.V | Kwesst Micro Systems Inc | 0.52 | 0.24 | 0.17 |
| MAL.TO | Magellan Aerospace Corp | 0.09 | 1.22 | 1.15 |
| MRS.V | Mission Ready Solutions Inc | 1.29 | 1.89 | 0.98 |
| PAT.TO | Patriot One Technologies Inc | 0.01 | 0.88 | 0.88 |
| Low | High | |
| Unlevered beta | 0.94 | 0.98 |
| Relevered beta | 0.97 | 1.03 |
| Adjusted relevered beta | 0.98 | 1.02 |
MDA.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 MDA.TO:
cost_of_equity (9.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.98) + 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.