SFD.TO
NXT Energy Solutions Inc
Price:  
0.68 
CAD
Volume:  
69,900.00
Canada | Energy Equipment & Services
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

SFD.TO WACC - Weighted Average Cost of Capital

The WACC of NXT Energy Solutions Inc (SFD.TO) is 5.6%.

The Cost of Equity of NXT Energy Solutions Inc (SFD.TO) is 5.85%.
The Cost of Debt of NXT Energy Solutions Inc (SFD.TO) is 5.00%.

Range Selected
Cost of equity 5.00% - 6.70% 5.85%
Tax rate 25.90% - 26.50% 26.20%
Cost of debt 5.00% - 5.00% 5.00%
WACC 4.8% - 6.3% 5.6%
WACC

SFD.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.26 0.33
Additional risk adjustments 0.5% 1.0%
Cost of equity 5.00% 6.70%
Tax rate 25.90% 26.50%
Debt/Equity ratio 0.13 0.13
Cost of debt 5.00% 5.00%
After-tax WACC 4.8% 6.3%
Selected WACC 5.6%

SFD.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 SFD.TO:

cost_of_equity (5.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.26) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.