MEG.TO WACC - Weighted Average Cost of Capital

The WACC of MEG Energy Corp (MEG.TO) is 8.0%.

The Cost of Equity of MEG Energy Corp (MEG.TO) is 8.75%.

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

	Range	Selected
Cost of equity	7.60% - 9.90%	8.75%
Tax rate	24.20% - 25.60%	24.90%
Cost of debt	4.00% - 5.60%	4.80%
WACC	6.9% - 9.0%	8.0%

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	0.87	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	9.90%

Tax rate	24.20%	25.60%
Debt/Equity ratio	0.18	0.18
Cost of debt	4.00%	5.60%

After-tax WACC	6.9%	9.0%


Selected WACC	8.0%

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 (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.87) + 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.