PD.TO WACC - Weighted Average Cost of Capital

The WACC of Precision Drilling Corp (PD.TO) is 9.0%.

The Cost of Equity of Precision Drilling Corp (PD.TO) is 13.25%.

The Cost of Debt of Precision Drilling Corp (PD.TO) is 6.10%.

	Range	Selected
Cost of equity	10.80% - 15.70%	13.25%
Tax rate	9.60% - 17.20%	13.40%
Cost of debt	5.40% - 6.80%	6.10%
WACC	7.7% - 10.4%	9.0%

WACC

PD.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.49	1.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	15.70%

Tax rate	9.60%	17.20%
Debt/Equity ratio	1.1	1.1
Cost of debt	5.40%	6.80%

After-tax WACC	7.7%	10.4%


Selected WACC	9.0%

PD.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 PD.TO:

cost_of_equity (13.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.49) + 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.