BIT
Blackrock Multi-Sector Income Trust
Price:  
14.15 
USD
Volume:  
92,607.00
United States | N/A
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BIT WACC - Weighted Average Cost of Capital

The WACC of Blackrock Multi-Sector Income Trust (BIT) is 7.4%.

The Cost of Equity of Blackrock Multi-Sector Income Trust (BIT) is 9.45%.
The Cost of Debt of Blackrock Multi-Sector Income Trust (BIT) is 4.45%.

Range Selected
Cost of equity 7.60% - 11.30% 9.45%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 4.90% 4.45%
WACC 6.1% - 8.7% 7.4%
WACC

BIT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.82 1.14
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 11.30%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.51 0.51
Cost of debt 4.00% 4.90%
After-tax WACC 6.1% 8.7%
Selected WACC 7.4%

BIT'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 BIT:

cost_of_equity (9.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.82) + 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.