BUA.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Bloom U.S. Income & Growth Fund (BUA.UN.TO) is 7.3%.

The Cost of Equity of Bloom U.S. Income & Growth Fund (BUA.UN.TO) is 10.95%.

The Cost of Debt of Bloom U.S. Income & Growth Fund (BUA.UN.TO) is 5.00%.

	Range	Selected
Cost of equity	8.60% - 13.30%	10.95%
Tax rate	26.50% - 26.50%	26.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.1% - 8.5%	7.3%

WACC

BUA.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	1.11	1.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	13.30%

Tax rate	26.50%	26.50%
Debt/Equity ratio	1	1
Cost of debt	5.00%	5.00%

After-tax WACC	6.1%	8.5%


Selected WACC	7.3%

BUA.UN.TO'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 BUA.UN.TO:

cost_of_equity (10.95%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (1.11) + 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.