CLDT
Chatham Lodging Trust
Price:  
7.03 
USD
Volume:  
413,173.00
United States | Equity Real Estate Investment Trusts (REITs)
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CLDT WACC - Weighted Average Cost of Capital

The WACC of Chatham Lodging Trust (CLDT) is 8.6%.

The Cost of Equity of Chatham Lodging Trust (CLDT) is 9.80%.
The Cost of Debt of Chatham Lodging Trust (CLDT) is 10.35%.

Range Selected
Cost of equity 8.40% - 11.20% 9.80%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 5.10% - 15.60% 10.35%
WACC 5.9% - 11.3% 8.6%
WACC

CLDT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.98 1.14
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 11.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 1.18 1.18
Cost of debt 5.10% 15.60%
After-tax WACC 5.9% 11.3%
Selected WACC 8.6%

CLDT'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 CLDT:

cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.