ERF.TO WACC - Weighted Average Cost of Capital

The WACC of Enerplus Corp (ERF.TO) is 7.7%.

The Cost of Equity of Enerplus Corp (ERF.TO) is 7.90%.

The Cost of Debt of Enerplus Corp (ERF.TO) is 4.50%.

	Range	Selected
Cost of equity	6.70% - 9.10%	7.90%
Tax rate	22.40% - 23.30%	22.85%
Cost of debt	4.00% - 5.00%	4.50%
WACC	6.6% - 8.9%	7.7%

WACC

ERF.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.69	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.10%

Tax rate	22.40%	23.30%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	5.00%

After-tax WACC	6.6%	8.9%


Selected WACC	7.7%

ERF.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 ERF.TO:

cost_of_equity (7.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.69) + 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.