VCM.TO WACC - Weighted Average Cost of Capital

The WACC of Vecima Networks Inc (VCM.TO) is 8.5%.

The Cost of Equity of Vecima Networks Inc (VCM.TO) is 9.05%.

The Cost of Debt of Vecima Networks Inc (VCM.TO) is 8.35%.

	Range	Selected
Cost of equity	7.60% - 10.50%	9.05%
Tax rate	16.90% - 20.20%	18.55%
Cost of debt	8.30% - 8.40%	8.35%
WACC	7.4% - 9.6%	8.5%

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	0.87	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.50%

Tax rate	16.90%	20.20%
Debt/Equity ratio	0.29	0.29
Cost of debt	8.30%	8.40%

After-tax WACC	7.4%	9.6%


Selected WACC	8.5%

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 (9.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.87) + 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.