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 8.85%.

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

	Range	Selected
Cost of equity	7.60% - 10.10%	8.85%
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	0.87	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.10%

Tax rate	37.50%	42.10%
Debt/Equity ratio	0.85	0.85
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 (8.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.87) + 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.