The WACC of Manulife US Real Estate Investment Trust (BTOU.SI) is 8.0%.
| Range | Selected | |
| Cost of equity | 9.90% - 16.10% | 13.00% |
| Tax rate | 3.70% - 7.50% | 5.60% |
| Cost of debt | 4.00% - 11.20% | 7.60% |
| WACC | 4.7% - 11.2% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.55 | 2.2 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.90% | 16.10% |
| Tax rate | 3.70% | 7.50% |
| Debt/Equity ratio | 5.76 | 5.76 |
| Cost of debt | 4.00% | 11.20% |
| After-tax WACC | 4.7% | 11.2% |
| Selected WACC | 8.0% | |
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 BTOU.SI:
cost_of_equity (13.00%) = risk_free_rate (2.95%) + equity_risk_premium (5.10%) * adjusted_beta (1.55) + 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.