WP.BK WACC - Weighted Average Cost of Capital

The WACC of WP Energy PCL (WP.BK) is 7.3%.

The Cost of Equity of WP Energy PCL (WP.BK) is 8.15%.

The Cost of Debt of WP Energy PCL (WP.BK) is 4.45%.

	Range	Selected
Cost of equity	7.10% - 9.20%	8.15%
Tax rate	23.20% - 24.50%	23.85%
Cost of debt	4.00% - 4.90%	4.45%
WACC	6.4% - 8.2%	7.3%

WACC

WP.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.61	0.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.20%

Tax rate	23.20%	24.50%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.00%	4.90%

After-tax WACC	6.4%	8.2%


Selected WACC	7.3%

WP.BK'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 WP.BK:

cost_of_equity (8.15%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.61) + 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.