WEF.TO WACC - Weighted Average Cost of Capital
The WACC of Western Forest Products Inc (WEF.TO) is 6.6%.
| Range | Selected | |
| Cost of equity | 6.8% - 10.5% | 8.65% |
| Tax rate | 26.6% - 28.2% | 27.4% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.1% - 8.0% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.72 | 1.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 10.5% |
| Tax rate | 26.6% | 28.2% |
| Debt/Equity ratio | 0.82 | 0.82 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.1% | 8.0% |
| Selected WACC | 6.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| WEF.TO | Western Forest Products Inc | 0.82 | 0.81 | 0.5 |
| ALMOU.PA | Moulinvest SA | 0.67 | 0.17 | 0.11 |
| WBI.L | Woodbois Ltd | 1.64 | -0.5 | -0.23 |
| ADN.TO | Acadian Timber Corp | 0.36 | 0.46 | 0.36 |
| AEP.V | Atlas Engineered Products Ltd | 0.58 | 0.5 | 0.35 |
| CFF.TO | Conifex Timber Inc | 6.12 | 2.01 | 0.37 |
| LPX | Louisiana-Pacific Corp | 0.05 | 0.94 | 0.91 |
| NP | Neenah Inc | 0.86 | 1.49 | 0.92 |
| SOY.TO | Sunopta Inc | 0.38 | 1.19 | 0.93 |
| VRS | Verso Corp | 0.01 | 1.89 | 1.89 |
| Low | High | |
| Unlevered beta | 0.36 | 0.67 |
| Relevered beta | 0.58 | 1.06 |
| Adjusted relevered beta | 0.72 | 1.04 |
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 (0.72) + 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.