BBU.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Brookfield Business Partners LP (BBU.UN.TO) is 10.5%.

The Cost of Equity of Brookfield Business Partners LP (BBU.UN.TO) is 37.00%.

The Cost of Debt of Brookfield Business Partners LP (BBU.UN.TO) is 10.50%.

	Range	Selected
Cost of equity	28.00% - 46.00%	37.00%
Tax rate	15.40% - 32.90%	24.15%
Cost of debt	6.10% - 14.90%	10.50%
WACC	7.4% - 13.6%	10.5%

WACC

BBU.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	4.87	6.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	28.00%	46.00%

Tax rate	15.40%	32.90%
Debt/Equity ratio	9.07	9.07
Cost of debt	6.10%	14.90%

After-tax WACC	7.4%	13.6%


Selected WACC	10.5%

BBU.UN.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 BBU.UN.TO:

cost_of_equity (37.00%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (4.87) + 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.