DII.B.TO WACC - Weighted Average Cost of Capital

The WACC of Dorel Industries Inc (DII.B.TO) is 7.4%.

The Cost of Equity of Dorel Industries Inc (DII.B.TO) is 38.25%.

The Cost of Debt of Dorel Industries Inc (DII.B.TO) is 6.20%.

	Range	Selected
Cost of equity	30.10% - 46.40%	38.25%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	5.40% - 7.00%	6.20%
WACC	6.2% - 8.6%	7.4%

WACC

DII.B.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	5.29	6.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	30.10%	46.40%

Tax rate	25.90%	26.50%
Debt/Equity ratio	11.03	11.03
Cost of debt	5.40%	7.00%

After-tax WACC	6.2%	8.6%


Selected WACC	7.4%

DII.B.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 DII.B.TO:

cost_of_equity (38.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (5.29) + 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.