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

The WACC of Chemtrade Logistics Income Fund (CHE.UN.TO) is 6.6%.

The Cost of Equity of Chemtrade Logistics Income Fund (CHE.UN.TO) is 8.30%.

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

	Range	Selected
Cost of equity	7.20% - 9.40%	8.30%
Tax rate	12.80% - 18.90%	15.85%
Cost of debt	4.40% - 5.10%	4.75%
WACC	5.9% - 7.3%	6.6%

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	0.8	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.40%

Tax rate	12.80%	18.90%
Debt/Equity ratio	0.66	0.66
Cost of debt	4.40%	5.10%

After-tax WACC	5.9%	7.3%


Selected WACC	6.6%

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 (8.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.8) + 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.