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

The WACC of Chartwell Retirement Residences (CSH.UN.TO) is 7.3%.

The Cost of Equity of Chartwell Retirement Residences (CSH.UN.TO) is 8.25%.

The Cost of Debt of Chartwell Retirement Residences (CSH.UN.TO) is 8.15%.

	Range	Selected
Cost of equity	7.10% - 9.40%	8.25%
Tax rate	24.00% - 34.60%	29.30%
Cost of debt	4.60% - 11.70%	8.15%
WACC	5.8% - 8.8%	7.3%

WACC

CSH.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	0.77	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.40%

Tax rate	24.00%	34.60%
Debt/Equity ratio	0.52	0.52
Cost of debt	4.60%	11.70%

After-tax WACC	5.8%	8.8%


Selected WACC	7.3%

CSH.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 CSH.UN.TO:

cost_of_equity (8.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.77) + 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.