BBD.B.TO
Bombardier Inc
Price:  
85.76 
CAD
Volume:  
161,727.00
Canada | Aerospace & Defense
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BBD.B.TO WACC - Weighted Average Cost of Capital

The WACC of Bombardier Inc (BBD.B.TO) is 6.9%.

The Cost of Equity of Bombardier Inc (BBD.B.TO) is 8.95%.
The Cost of Debt of Bombardier Inc (BBD.B.TO) is 7.85%.

Range Selected
Cost of equity 7.60% - 10.30% 8.95%
Tax rate 37.50% - 42.10% 39.80%
Cost of debt 7.30% - 8.40% 7.85%
WACC 6.2% - 7.7% 6.9%
WACC

BBD.B.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.86 1
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.30%
Tax rate 37.50% 42.10%
Debt/Equity ratio 0.89 0.89
Cost of debt 7.30% 8.40%
After-tax WACC 6.2% 7.7%
Selected WACC 6.9%

BBD.B.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 BBD.B.TO:

cost_of_equity (8.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.86) + 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.