Y.TO WACC - Weighted Average Cost of Capital

The WACC of Yellow Pages Ltd (Y.TO) is 7.0%.

The Cost of Equity of Yellow Pages Ltd (Y.TO) is 7.95%.

The Cost of Debt of Yellow Pages Ltd (Y.TO) is 4.25%.

	Range	Selected
Cost of equity	6.50% - 9.40%	7.95%
Tax rate	20.00% - 22.20%	21.10%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.8% - 8.1%	7.0%

WACC

Y.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.66	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.40%

Tax rate	20.00%	22.20%
Debt/Equity ratio	0.27	0.27
Cost of debt	4.00%	4.50%

After-tax WACC	5.8%	8.1%


Selected WACC	7.0%

Y.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 Y.TO:

cost_of_equity (7.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.66) + 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.