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

The WACC of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 7.4%.

The Cost of Equity of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 9.15%.

The Cost of Debt of Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO) is 6.20%.

	Range	Selected
Cost of equity	8.00% - 10.30%	9.15%
Tax rate	9.30% - 13.40%	11.35%
Cost of debt	4.00% - 8.40%	6.20%
WACC	6.0% - 8.9%	7.4%

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	0.96	1.01

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	10.30%

Tax rate	9.30%	13.40%
Debt/Equity ratio	0.88	0.88
Cost of debt	4.00%	8.40%

After-tax WACC	6.0%	8.9%


Selected WACC	7.4%

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 (9.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.96) + 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.