The WACC of Becker Milk Co Ltd (BEK.B.TO) is 5.6%.
Range | Selected | |
Cost of equity | 6.2% - 8.9% | 7.55% |
Tax rate | 24.2% - 29.7% | 26.95% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 5.0% - 6.2% | 5.6% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.59 | 0.77 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.2% | 8.9% |
Tax rate | 24.2% | 29.7% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 5.0% | 6.2% |
Selected WACC | 5.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BEK.B.TO | Becker Milk Co Ltd | 0.85 | 0.28 | 0.18 |
ABCP | AmBase Corp | 0.13 | 0.4 | 0.37 |
ARL | American Realty Investors Inc | 0.79 | 1.18 | 0.76 |
FUTL | FutureLand Corp | 56.36 | -1.02 | -0.02 |
GYRO | Gyrodyne LLC | 0.59 | 0.01 | 0.01 |
HOOB | Holobeam Inc | 1.09 | 0.11 | 0.06 |
KDSX.V | Kadestone Capital Corp | 0.31 | 1.17 | 0.96 |
TCI | Transcontinental Realty Investors Inc | 0.47 | 0.58 | 0.43 |
UFC.V | Urbanfund Corp | 1.22 | 0.24 | 0.13 |
VCOM.V | Vivere Communities Inc | 2.31 | 1.06 | 0.4 |
ZDPY | Zoned Properties Inc | 1.39 | 0.58 | 0.29 |
Low | High | |
Unlevered beta | 0.18 | 0.37 |
Relevered beta | 0.39 | 0.66 |
Adjusted relevered beta | 0.59 | 0.77 |
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 BEK.B.TO:
cost_of_equity (7.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.59) + 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.