PPL.TO WACC - Weighted Average Cost of Capital

The WACC of Pembina Pipeline Corp (PPL.TO) is 6.7%.

The Cost of Equity of Pembina Pipeline Corp (PPL.TO) is 8.05%.

The Cost of Debt of Pembina Pipeline Corp (PPL.TO) is 4.30%.

	Range	Selected
Cost of equity	7.00% - 9.10%	8.05%
Tax rate	14.90% - 20.90%	17.90%
Cost of debt	4.10% - 4.50%	4.30%
WACC	6.0% - 7.4%	6.7%

WACC

PPL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.76	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.00%	9.10%

Tax rate	14.90%	20.90%
Debt/Equity ratio	0.44	0.44
Cost of debt	4.10%	4.50%

After-tax WACC	6.0%	7.4%


Selected WACC	6.7%

PPL.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 PPL.TO:

cost_of_equity (8.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.76) + 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.