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

The WACC of Noranda Income Fund (NIF.UN.TO) is 7.1%.

The Cost of Equity of Noranda Income Fund (NIF.UN.TO) is 8.85%.

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

	Range	Selected
Cost of equity	6.80% - 10.90%	8.85%
Tax rate	23.60% - 24.20%	23.90%
Cost of debt	5.20% - 11.70%	8.45%
WACC	4.8% - 9.4%	7.1%

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	0.71	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	10.90%

Tax rate	23.60%	24.20%
Debt/Equity ratio	2.61	2.61
Cost of debt	5.20%	11.70%

After-tax WACC	4.8%	9.4%


Selected WACC	7.1%

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 (8.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.71) + 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.