BIP
Brookfield Infrastructure Partners LP
Price:  
34.07 
USD
Volume:  
188,825
Bermuda | Multi-Utilities

BIP WACC - Weighted Average Cost of Capital

The WACC of Brookfield Infrastructure Partners LP (BIP) is 7.0%.

The Cost of Equity of Brookfield Infrastructure Partners LP (BIP) is 8.05%.
The Cost of Debt of Brookfield Infrastructure Partners LP (BIP) is 8.95%.

RangeSelected
Cost of equity6.9% - 9.2%8.05%
Tax rate22.0% - 26.1%24.05%
Cost of debt5.5% - 12.4%8.95%
WACC4.8% - 9.2%7.0%
WACC

BIP WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.650.78
Additional risk adjustments0.0%0.5%
Cost of equity6.9%9.2%
Tax rate22.0%26.1%
Debt/Equity ratio
3.643.64
Cost of debt5.5%12.4%
After-tax WACC4.8%9.2%
Selected WACC7.0%

BIP'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 BIP:

cost_of_equity (8.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.65) + 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.