OPT.TO
Optiva Inc
Price:  
1.80 
CAD
Volume:  
13,800.00
Canada | Software
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OPT.TO WACC - Weighted Average Cost of Capital

The WACC of Optiva Inc (OPT.TO) is 5.2%.

The Cost of Equity of Optiva Inc (OPT.TO) is 7.45%.
The Cost of Debt of Optiva Inc (OPT.TO) is 6.00%.

Range Selected
Cost of equity 5.00% - 9.90% 7.45%
Tax rate 17.10% - 18.40% 17.75%
Cost of debt 5.00% - 7.00% 6.00%
WACC 4.3% - 6.1% 5.2%
WACC

OPT.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.37 0.94
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.00% 9.90%
Tax rate 17.10% 18.40%
Debt/Equity ratio 8.53 8.53
Cost of debt 5.00% 7.00%
After-tax WACC 4.3% 6.1%
Selected WACC 5.2%

OPT.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 OPT.TO:

cost_of_equity (7.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.37) + 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.