NPI.TO WACC - Weighted Average Cost of Capital
The WACC of Northland Power Inc (NPI.TO) is 6.2%.
| Range | Selected | |
| Cost of equity | 8.4% - 11.1% | 9.75% |
| Tax rate | 30.1% - 35.0% | 32.55% |
| Cost of debt | 4.3% - 6.3% | 5.3% |
| WACC | 5.3% - 7.1% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.03 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.4% | 11.1% |
| Tax rate | 30.1% | 35.0% |
| Debt/Equity ratio | 1.36 | 1.36 |
| Cost of debt | 4.3% | 6.3% |
| After-tax WACC | 5.3% | 7.1% |
| Selected WACC | 6.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NPI.TO | Northland Power Inc | 1.36 | 0.76 | 0.4 |
| AT | Atlantic Power Corp | 2.08 | 0.14 | 0.06 |
| BLX.TO | Boralex Inc | 1.41 | 1.07 | 0.56 |
| CPX.TO | Capital Power Corp | 0.61 | 1.02 | 0.73 |
| KEN | Kenon Holdings Ltd | 0.73 | 0.79 | 0.54 |
| MXG.TO | Maxim Power Corp | 0 | 1.31 | 1.31 |
| RNW.TO | TransAlta Renewables Inc | 0.24 | 1.28 | 1.11 |
| TA.TO | TransAlta Corp | 1.2 | 1.05 | 0.58 |
| AKSEN.IS | Aksa Enerji Uretim AS | 0.24 | 0.88 | 0.76 |
| GOOD.L | Good Energy Group PLC | 0.06 | 0.47 | 0.45 |
| Low | High | |
| Unlevered beta | 0.55 | 0.64 |
| Relevered beta | 1.04 | 1.21 |
| Adjusted relevered beta | 1.03 | 1.14 |
NPI.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 NPI.TO:
cost_of_equity (9.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.03) + 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.