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

The WACC of Brookfield Business Partners LP (BBU.UN.TO) is 10.1%.

The Cost of Equity of Brookfield Business Partners LP (BBU.UN.TO) is 55.35%.

The Cost of Debt of Brookfield Business Partners LP (BBU.UN.TO) is 8.90%.

	Range	Selected
Cost of equity	44.50% - 66.20%	55.35%
Tax rate	15.40% - 32.90%	24.15%
Cost of debt	6.10% - 11.70%	8.90%
WACC	8.1% - 12.2%	10.1%

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	8.1	10.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	44.50%	66.20%

Tax rate	15.40%	32.90%
Debt/Equity ratio	12.32	12.32
Cost of debt	6.10%	11.70%

After-tax WACC	8.1%	12.2%


Selected WACC	10.1%

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 (55.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (8.1) + 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.