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

The WACC of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 8.7%.

The Cost of Equity of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 9.20%.

The Cost of Debt of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 9.45%.

	Range	Selected
Cost of equity	7.90% - 10.50%	9.20%
Tax rate	9.30% - 13.40%	11.35%
Cost of debt	4.00% - 14.90%	9.45%
WACC	5.7% - 11.7%	8.7%

WACC

CAR.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.93	1.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.50%

Tax rate	9.30%	13.40%
Debt/Equity ratio	1.05	1.05
Cost of debt	4.00%	14.90%

After-tax WACC	5.7%	11.7%


Selected WACC	8.7%

CAR.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 CAR.UN.TO:

cost_of_equity (9.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.93) + 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.