The WACC of Brookfield Business Corp (BBUC.TO) is 11.4%.
| Range | Selected | |
| Cost of equity | 7.70% - 12.00% | 9.85% |
| Tax rate | 8.00% - 10.70% | 9.35% |
| Cost of debt | 7.80% - 20.20% | 14.00% |
| WACC | 7.4% - 15.4% | 11.4% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.89 | 1.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 12.00% |
| Tax rate | 8.00% | 10.70% |
| Debt/Equity ratio | 1.27 | 1.27 |
| Cost of debt | 7.80% | 20.20% |
| After-tax WACC | 7.4% | 15.4% |
| Selected WACC | 11.4% | |
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 BBUC.TO:
cost_of_equity (9.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.89) + 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.