BHK
BlackRock Core Bond Trust
Price:  
10.04 
USD
Volume:  
317,430.00
United States | N/A
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BHK WACC - Weighted Average Cost of Capital

The WACC of BlackRock Core Bond Trust (BHK) is 7.4%.

The Cost of Equity of BlackRock Core Bond Trust (BHK) is 8.85%.
The Cost of Debt of BlackRock Core Bond Trust (BHK) is 6.55%.

Range Selected
Cost of equity 7.60% - 10.10% 8.85%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 9.10% 6.55%
WACC 6.0% - 8.9% 7.4%
WACC

BHK WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.94
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.10%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.54 0.54
Cost of debt 4.00% 9.10%
After-tax WACC 6.0% 8.9%
Selected WACC 7.4%

BHK'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 BHK:

cost_of_equity (8.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.