SPG.TO WACC - Weighted Average Cost of Capital

The WACC of Spark Power Group Inc (SPG.TO) is 8.6%.

The Cost of Equity of Spark Power Group Inc (SPG.TO) is 7.60%.

The Cost of Debt of Spark Power Group Inc (SPG.TO) is 13.90%.

	Range	Selected
Cost of equity	6.20% - 9.00%	7.60%
Tax rate	20.80% - 34.50%	27.65%
Cost of debt	4.60% - 23.20%	13.90%
WACC	4.8% - 12.5%	8.6%

WACC

SPG.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.6	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	9.00%

Tax rate	20.80%	34.50%
Debt/Equity ratio	1.28	1.28
Cost of debt	4.60%	23.20%

After-tax WACC	4.8%	12.5%


Selected WACC	8.6%

SPG.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 SPG.TO:

cost_of_equity (7.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.6) + 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.