PTS.TO WACC - Weighted Average Cost of Capital

The WACC of Points International Ltd (PTS.TO) is 7.5%.

The Cost of Equity of Points International Ltd (PTS.TO) is 7.50%.

The Cost of Debt of Points International Ltd (PTS.TO) is 4.25%.

	Range	Selected
Cost of equity	6.30% - 8.70%	7.50%
Tax rate	25.90% - 29.30%	27.60%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.3% - 8.7%	7.5%

WACC

PTS.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.62	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	8.70%

Tax rate	25.90%	29.30%
Debt/Equity ratio	0	0
Cost of debt	4.00%	4.50%

After-tax WACC	6.3%	8.7%


Selected WACC	7.5%

PTS.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 PTS.TO:

cost_of_equity (7.50%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.62) + 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.