NIF.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Noranda Income Fund (NIF.UN.TO) is 6.7%.

The Cost of Equity of Noranda Income Fund (NIF.UN.TO) is 7.45%.

The Cost of Debt of Noranda Income Fund (NIF.UN.TO) is 8.45%.

	Range	Selected
Cost of equity	5.80% - 9.10%	7.45%
Tax rate	23.60% - 24.20%	23.90%
Cost of debt	5.20% - 11.70%	8.45%
WACC	4.5% - 8.9%	6.7%

WACC

NIF.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.53	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.80%	9.10%

Tax rate	23.60%	24.20%
Debt/Equity ratio	2.6	2.6
Cost of debt	5.20%	11.70%

After-tax WACC	4.5%	8.9%


Selected WACC	6.7%

NIF.UN.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 NIF.UN.TO:

cost_of_equity (7.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.53) + 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.