CHE.UN.TO
Chemtrade Logistics Income Fund
Price:  
9.64 
CAD
Volume:  
72,302.00
Canada | Chemicals
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CHE.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Chemtrade Logistics Income Fund (CHE.UN.TO) is 7.8%.

The Cost of Equity of Chemtrade Logistics Income Fund (CHE.UN.TO) is 11.15%.
The Cost of Debt of Chemtrade Logistics Income Fund (CHE.UN.TO) is 4.60%.

Range Selected
Cost of equity 9.60% - 12.70% 11.15%
Tax rate 19.00% - 23.50% 21.25%
Cost of debt 4.40% - 4.80% 4.60%
WACC 6.9% - 8.6% 7.8%
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 1.26 1.4
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.60% 12.70%
Tax rate 19.00% 23.50%
Debt/Equity ratio 0.81 0.81
Cost of debt 4.40% 4.80%
After-tax WACC 6.9% 8.6%
Selected WACC 7.8%

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 (11.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.26) + 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.