The WACC of Zenabis Global Inc (ZENA.TO) is 5.5%.
| Range | Selected | |
| Cost of equity | 5.20% - 7.50% | 6.35% |
| Tax rate | 7.70% - 19.30% | 13.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 6.0% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.4 | 0.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.20% | 7.50% |
| Tax rate | 7.70% | 19.30% |
| Debt/Equity ratio | 0.77 | 0.77 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 6.0% |
| Selected WACC | 5.5% | |
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 ZENA.TO:
cost_of_equity (6.35%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.4) + 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.