WEF.TO WACC - Weighted Average Cost of Capital

The WACC of Western Forest Products Inc (WEF.TO) is 6.5%.

The Cost of Equity of Western Forest Products Inc (WEF.TO) is 8.65%.

The Cost of Debt of Western Forest Products Inc (WEF.TO) is 5.50%.

	Range	Selected
Cost of equity	6.90% - 10.40%	8.65%
Tax rate	26.60% - 28.20%	27.40%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.1% - 8.0%	6.5%

WACC

WEF.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.73	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.40%

Tax rate	26.60%	28.20%
Debt/Equity ratio	0.83	0.83
Cost of debt	4.00%	7.00%

After-tax WACC	5.1%	8.0%


Selected WACC	6.5%

WEF.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 WEF.TO:

cost_of_equity (8.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.73) + 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.