WCP.TO WACC - Weighted Average Cost of Capital

The WACC of Whitecap Resources Inc (WCP.TO) is 8.7%.

The Cost of Equity of Whitecap Resources Inc (WCP.TO) is 10.05%.

The Cost of Debt of Whitecap Resources Inc (WCP.TO) is 4.30%.

	Range	Selected
Cost of equity	8.50% - 11.60%	10.05%
Tax rate	24.30% - 24.50%	24.40%
Cost of debt	4.00% - 4.60%	4.30%
WACC	7.4% - 10.0%	8.7%

WACC

WCP.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.05	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	11.60%

Tax rate	24.30%	24.50%
Debt/Equity ratio	0.24	0.24
Cost of debt	4.00%	4.60%

After-tax WACC	7.4%	10.0%


Selected WACC	8.7%

WCP.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 WCP.TO:

cost_of_equity (10.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.05) + 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.