X.TO WACC - Weighted Average Cost of Capital

The WACC of TMX Group Ltd (X.TO) is 6.1%.

The Cost of Equity of TMX Group Ltd (X.TO) is 6.45%.

The Cost of Debt of TMX Group Ltd (X.TO) is 4.40%.

	Range	Selected
Cost of equity	5.50% - 7.40%	6.45%
Tax rate	23.50% - 26.20%	24.85%
Cost of debt	4.20% - 4.60%	4.40%
WACC	5.2% - 6.9%	6.1%

WACC

X.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.45	0.53

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.40%

Tax rate	23.50%	26.20%
Debt/Equity ratio	0.14	0.14
Cost of debt	4.20%	4.60%

After-tax WACC	5.2%	6.9%


Selected WACC	6.1%

X.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 X.TO:

cost_of_equity (6.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.45) + 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.