PNC.A.TO WACC - Weighted Average Cost of Capital

The WACC of Postmedia Network Canada Corp (PNC.A.TO) is 5.4%.

The Cost of Equity of Postmedia Network Canada Corp (PNC.A.TO) is 13.85%.

The Cost of Debt of Postmedia Network Canada Corp (PNC.A.TO) is 4.45%.

	Range	Selected
Cost of equity	10.70% - 17.00%	13.85%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	4.00% - 4.90%	4.45%
WACC	4.5% - 6.3%	5.4%

WACC

PNC.A.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.48	2.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.70%	17.00%

Tax rate	25.90%	26.50%
Debt/Equity ratio	3.93	3.93
Cost of debt	4.00%	4.90%

After-tax WACC	4.5%	6.3%


Selected WACC	5.4%

PNC.A.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 PNC.A.TO:

cost_of_equity (13.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.48) + 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.