CPT WACC - Weighted Average Cost of Capital

The WACC of Camden Property Trust (CPT) is 6.5%.

The Cost of Equity of Camden Property Trust (CPT) is 6.80%.

The Cost of Debt of Camden Property Trust (CPT) is 5.50%.

	Range	Selected
Cost of equity	5.60% - 8.00%	6.80%
Tax rate	0.80% - 1.10%	0.95%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.3% - 7.8%	6.5%

WACC

CPT WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.37	0.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.60%	8.00%

Tax rate	0.80%	1.10%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.00%	7.00%

After-tax WACC	5.3%	7.8%


Selected WACC	6.5%

CPT'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 CPT:

cost_of_equity (6.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.37) + 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.