The WACC of Manulife US Real Estate Investment Trust (BTOU.SI) is 6.6%.
| Range | Selected | |
| Cost of equity | 10.50% - 17.90% | 14.20% |
| Tax rate | 3.70% - 7.50% | 5.60% |
| Cost of debt | 4.00% - 8.00% | 6.00% |
| WACC | 4.6% - 8.5% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.69 | 2.54 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.50% | 17.90% |
| Tax rate | 3.70% | 7.50% |
| Debt/Equity ratio | 7.98 | 7.98 |
| Cost of debt | 4.00% | 8.00% |
| After-tax WACC | 4.6% | 8.5% |
| Selected WACC | 6.6% | |
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 (14.20%) = risk_free_rate (2.95%) + equity_risk_premium (5.10%) * adjusted_beta (1.69) + 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.