The WACC of Global Innovation Dividend Fund (MINN.TO) is 18.8%.
| Range | Selected | |
| Cost of equity | 17.30% - 21.10% | 19.20% |
| Tax rate | 1.20% - 3.70% | 2.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 16.9% - 20.6% | 18.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 2.77 | 2.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.30% | 21.10% |
| Tax rate | 1.20% | 3.70% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 16.9% | 20.6% |
| Selected WACC | 18.8% | |
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 MINN.TO:
cost_of_equity (19.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (2.77) + 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.