The WACC of Brookfield Renewable Partners LP (BEP.UN.TO) is 7.5%.
Range | Selected | |
Cost of equity | 5.80% - 9.10% | 7.45% |
Tax rate | 19.50% - 46.80% | 33.15% |
Cost of debt | 5.30% - 20.20% | 12.75% |
WACC | 4.5% - 10.5% | 7.5% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.52 | 0.82 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.80% | 9.10% |
Tax rate | 19.50% | 46.80% |
Debt/Equity ratio | 5.46 | 5.46 |
Cost of debt | 5.30% | 20.20% |
After-tax WACC | 4.5% | 10.5% |
Selected WACC | 7.5% | |
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 BEP.UN.TO:
cost_of_equity (7.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.52) + 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.