TD.TO
Toronto-Dominion Bank
Price:  
88.07 
CAD
Volume:  
566,162.00
Canada | Banks
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TD.TO WACC - Weighted Average Cost of Capital

The WACC of Toronto-Dominion Bank (TD.TO) is 5.6%.

The Cost of Equity of Toronto-Dominion Bank (TD.TO) is 8.35%.
The Cost of Debt of Toronto-Dominion Bank (TD.TO) is 5.00%.

Range Selected
Cost of equity 7.00% - 9.70% 8.35%
Tax rate 20.50% - 22.40% 21.45%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.1% - 6.1% 5.6%
WACC

TD.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.76 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 9.70%
Tax rate 20.50% 22.40%
Debt/Equity ratio 1.67 1.67
Cost of debt 5.00% 5.00%
After-tax WACC 5.1% 6.1%
Selected WACC 5.6%

TD.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 TD.TO:

cost_of_equity (8.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.76) + 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.