MEG.TO
MEG Energy Corp
Price:  
20.10 
CAD
Volume:  
328,599.00
Canada | Oil, Gas & Consumable Fuels
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MEG.TO WACC - Weighted Average Cost of Capital

The WACC of MEG Energy Corp (MEG.TO) is 7.9%.

The Cost of Equity of MEG Energy Corp (MEG.TO) is 8.85%.
The Cost of Debt of MEG Energy Corp (MEG.TO) is 4.80%.

Range Selected
Cost of equity 7.70% - 10.00% 8.85%
Tax rate 24.20% - 25.60% 24.90%
Cost of debt 4.00% - 5.60% 4.80%
WACC 6.9% - 8.9% 7.9%
WACC

MEG.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.89 0.95
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.70% 10.00%
Tax rate 24.20% 25.60%
Debt/Equity ratio 0.22 0.22
Cost of debt 4.00% 5.60%
After-tax WACC 6.9% 8.9%
Selected WACC 7.9%

MEG.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 MEG.TO:

cost_of_equity (8.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.89) + 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.