The WACC of Blackrock North American Income Trust PLC (BRNA.L) is 9.1%.
| Range | Selected | |
| Cost of equity | 11.60% - 15.40% | 13.50% |
| Tax rate | 4.70% - 5.30% | 5.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.2% - 10.1% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.62 | 1.81 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.60% | 15.40% |
| Tax rate | 4.70% | 5.30% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.2% | 10.1% |
| Selected WACC | 9.1% | |
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 BRNA.L:
cost_of_equity (13.50%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.62) + 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.