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

The WACC of Dream Office Real Estate Investment Trust (D.UN.TO) is 9.2%.

The Cost of Equity of Dream Office Real Estate Investment Trust (D.UN.TO) is 7.30%.

The Cost of Debt of Dream Office Real Estate Investment Trust (D.UN.TO) is 9.65%.

	Range	Selected
Cost of equity	6.10% - 8.50%	7.30%
Tax rate	0.50% - 0.90%	0.70%
Cost of debt	4.40% - 14.90%	9.65%
WACC	4.6% - 13.7%	9.2%

WACC

D.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	0.58	0.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	8.50%

Tax rate	0.50%	0.90%
Debt/Equity ratio	4.89	4.89
Cost of debt	4.40%	14.90%

After-tax WACC	4.6%	13.7%


Selected WACC	9.2%

D.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 D.UN.TO:

cost_of_equity (7.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.