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

The WACC of Chemtrade Logistics Income Fund (CHE.UN.TO) is 7.7%.

The Cost of Equity of Chemtrade Logistics Income Fund (CHE.UN.TO) is 10.60%.

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

	Range	Selected
Cost of equity	9.20% - 12.00%	10.60%
Tax rate	19.00% - 23.50%	21.25%
Cost of debt	4.40% - 4.80%	4.60%
WACC	6.9% - 8.6%	7.7%

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	1.19	1.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	12.00%

Tax rate	19.00%	23.50%
Debt/Equity ratio	0.69	0.69
Cost of debt	4.40%	4.80%

After-tax WACC	6.9%	8.6%


Selected WACC	7.7%

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 (10.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.19) + 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.