BHK
BlackRock Core Bond Trust
Price:  
10.50 
USD
Volume:  
110,683.00
United States | N/A
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BHK WACC - Weighted Average Cost of Capital

The WACC of BlackRock Core Bond Trust (BHK) is 7.2%.

The Cost of Equity of BlackRock Core Bond Trust (BHK) is 9.85%.
The Cost of Debt of BlackRock Core Bond Trust (BHK) is 4.75%.

Range Selected
Cost of equity 8.50% - 11.20% 9.85%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 5.50% 4.75%
WACC 6.2% - 8.2% 7.2%
WACC

BHK WACC calculation

Category Low High
Long-term bond rate 4.2% 4.7%
Equity market risk premium 5.0% 6.0%
Adjusted beta 0.86 1
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.50% 11.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.71 0.71
Cost of debt 4.00% 5.50%
After-tax WACC 6.2% 8.2%
Selected WACC 7.2%

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 (9.85%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.86) + 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.