DBM.TO WACC - Weighted Average Cost of Capital

The WACC of Doman Building Materials Group Ltd (DBM.TO) is 6.5%.

The Cost of Equity of Doman Building Materials Group Ltd (DBM.TO) is 10.95%.

The Cost of Debt of Doman Building Materials Group Ltd (DBM.TO) is 5.10%.

	Range	Selected
Cost of equity	8.70% - 13.20%	10.95%
Tax rate	17.50% - 21.40%	19.45%
Cost of debt	4.80% - 5.40%	5.10%
WACC	5.6% - 7.4%	6.5%

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	1.09	1.49

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.70%	13.20%

Tax rate	17.50%	21.40%
Debt/Equity ratio	1.85	1.85
Cost of debt	4.80%	5.40%

After-tax WACC	5.6%	7.4%


Selected WACC	6.5%

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 (10.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.09) + 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.