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

The WACC of Chemtrade Logistics Income Fund (CHE.UN.TO) is 8.1%.

The Cost of Equity of Chemtrade Logistics Income Fund (CHE.UN.TO) is 10.15%.

The Cost of Debt of Chemtrade Logistics Income Fund (CHE.UN.TO) is 4.75%.

	Range	Selected
Cost of equity	8.90% - 11.40%	10.15%
Tax rate	12.80% - 18.90%	15.85%
Cost of debt	4.40% - 5.10%	4.75%
WACC	7.2% - 8.9%	8.1%

WACC

CHE.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	1.12	1.19

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	11.40%

Tax rate	12.80%	18.90%
Debt/Equity ratio	0.51	0.51
Cost of debt	4.40%	5.10%

After-tax WACC	7.2%	8.9%


Selected WACC	8.1%

CHE.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 CHE.UN.TO:

cost_of_equity (10.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.12) + 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.