VCM.TO WACC - Weighted Average Cost of Capital

The WACC of Vecima Networks Inc (VCM.TO) is 6.8%.

The Cost of Equity of Vecima Networks Inc (VCM.TO) is 6.75%.

The Cost of Debt of Vecima Networks Inc (VCM.TO) is 9.45%.

	Range	Selected
Cost of equity	5.10% - 8.40%	6.75%
Tax rate	20.70% - 24.20%	22.45%
Cost of debt	7.00% - 11.90%	9.45%
WACC	5.2% - 8.5%	6.8%

WACC

VCM.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.38	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.10%	8.40%

Tax rate	20.70%	24.20%
Debt/Equity ratio	0.2	0.2
Cost of debt	7.00%	11.90%

After-tax WACC	5.2%	8.5%


Selected WACC	6.8%

VCM.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 VCM.TO:

cost_of_equity (6.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.38) + 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.