DBM.TO WACC - Weighted Average Cost of Capital

The WACC of Doman Building Materials Group Ltd (DBM.TO) is 7.2%.

The Cost of Equity of Doman Building Materials Group Ltd (DBM.TO) is 10.50%.

The Cost of Debt of Doman Building Materials Group Ltd (DBM.TO) is 5.50%.

	Range	Selected
Cost of equity	9.10% - 11.90%	10.50%
Tax rate	12.60% - 16.10%	14.35%
Cost of debt	4.70% - 6.30%	5.50%
WACC	6.2% - 8.1%	7.2%

WACC

DBM.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.17	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.90%

Tax rate	12.60%	16.10%
Debt/Equity ratio	1.37	1.37
Cost of debt	4.70%	6.30%

After-tax WACC	6.2%	8.1%


Selected WACC	7.2%

DBM.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 DBM.TO:

cost_of_equity (10.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.17) + 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.