PRMW.TO WACC - Weighted Average Cost of Capital

The WACC of Primo Water Corp (MISSISSAUGA) (PRMW.TO) is 6.1%.

The Cost of Equity of Primo Water Corp (MISSISSAUGA) (PRMW.TO) is 7.10%.

The Cost of Debt of Primo Water Corp (MISSISSAUGA) (PRMW.TO) is 4.50%.

	Range	Selected
Cost of equity	5.90% - 8.30%	7.10%
Tax rate	27.80% - 46.40%	37.10%
Cost of debt	4.00% - 5.00%	4.50%
WACC	5.2% - 7.0%	6.1%

WACC

PRMW.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.54	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.30%

Tax rate	27.80%	46.40%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.00%	5.00%

After-tax WACC	5.2%	7.0%


Selected WACC	6.1%

PRMW.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 PRMW.TO:

cost_of_equity (7.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.54) + 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.