SFTC.TO WACC - Weighted Average Cost of Capital

The WACC of Softchoice Corp (CA) (SFTC.TO) is 8.0%.

The Cost of Equity of Softchoice Corp (CA) (SFTC.TO) is 8.20%.

The Cost of Debt of Softchoice Corp (CA) (SFTC.TO) is 5.15%.

	Range	Selected
Cost of equity	7.30% - 9.10%	8.20%
Tax rate	26.00% - 29.00%	27.50%
Cost of debt	4.40% - 5.90%	5.15%
WACC	7.1% - 8.9%	8.0%

WACC

SFTC.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.8	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	9.10%

Tax rate	26.00%	29.00%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.40%	5.90%

After-tax WACC	7.1%	8.9%


Selected WACC	8.0%

SFTC.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 SFTC.TO:

cost_of_equity (8.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.8) + 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.