NOA.TO WACC - Weighted Average Cost of Capital

The WACC of North American Construction Group Ltd (NOA.TO) is 10.0%.

The Cost of Equity of North American Construction Group Ltd (NOA.TO) is 13.95%.

The Cost of Debt of North American Construction Group Ltd (NOA.TO) is 9.30%.

	Range	Selected
Cost of equity	11.40% - 16.50%	13.95%
Tax rate	19.60% - 22.80%	21.20%
Cost of debt	6.90% - 11.70%	9.30%
WACC	7.9% - 12.1%	10.0%

WACC

NOA.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.61	2.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	16.50%

Tax rate	19.60%	22.80%
Debt/Equity ratio	1.46	1.46
Cost of debt	6.90%	11.70%

After-tax WACC	7.9%	12.1%


Selected WACC	10.0%

NOA.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 NOA.TO:

cost_of_equity (13.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.61) + 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.