PRN.TO WACC - Weighted Average Cost of Capital

The WACC of Profound Medical Corp (PRN.TO) is 8.0%.

The Cost of Equity of Profound Medical Corp (PRN.TO) is 8.10%.

The Cost of Debt of Profound Medical Corp (PRN.TO) is 5.00%.

	Range	Selected
Cost of equity	6.60% - 9.60%	8.10%
Tax rate	0.30% - 0.40%	0.35%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.5% - 9.4%	8.0%

WACC

PRN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.67	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.60%

Tax rate	0.30%	0.40%
Debt/Equity ratio	0.03	0.03
Cost of debt	5.00%	5.00%

After-tax WACC	6.5%	9.4%


Selected WACC	8.0%

PRN.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 PRN.TO:

cost_of_equity (8.10%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.67) + 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.