The WACC of Brooker Group PCL (BROOK.BK) is 6.4%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.20% | 6.70% |
| Tax rate | 4.60% - 8.10% | 6.35% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.1% - 7.8% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.21 | 0.42 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.20% | 8.20% |
| Tax rate | 4.60% | 8.10% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.1% | 7.8% |
| Selected WACC | 6.4% | |
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 BROOK.BK:
cost_of_equity (6.70%) = risk_free_rate (2.95%) + equity_risk_premium (7.90%) * adjusted_beta (0.21) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.