BLCO WACC - Weighted Average Cost of Capital

The WACC of Bausch + Lomb Corp (BLCO) is 13.5%.

The Cost of Equity of Bausch + Lomb Corp (BLCO) is 8.80%.

The Cost of Debt of Bausch + Lomb Corp (BLCO) is 23.90%.

	Range	Selected
Cost of equity	6.50% - 11.10%	8.80%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	23.90% - 23.90%	23.90%
WACC	12.5% - 14.5%	13.5%

WACC

BLCO WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.57	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	11.10%

Tax rate	26.20%	27.00%
Debt/Equity ratio	1.16	1.16
Cost of debt	23.90%	23.90%

After-tax WACC	12.5%	14.5%


Selected WACC	13.5%

BLCO'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 BLCO:

cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.57) + 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.