PFB.TO WACC - Weighted Average Cost of Capital

The WACC of PFB Corporation (PFB.TO) is 8.7%.

The Cost of Equity of PFB Corporation (PFB.TO) is 9.20%.

The Cost of Debt of PFB Corporation (PFB.TO) is 5.60%.

	Range	Selected
Cost of equity	6.90% - 11.50%	9.20%
Tax rate	26.60% - 27.20%	26.90%
Cost of debt	4.00% - 7.20%	5.60%
WACC	6.5% - 11.0%	8.7%

WACC

PFB.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.75	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	11.50%

Tax rate	26.60%	27.20%
Debt/Equity ratio	0.1	0.1
Cost of debt	4.00%	7.20%

After-tax WACC	6.5%	11.0%


Selected WACC	8.7%

PFB.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 PFB.TO:

cost_of_equity (9.20%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.75) + 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.