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

The WACC of Dorel Industries Inc (DII.B.TO) is 8.0%.

The Cost of Equity of Dorel Industries Inc (DII.B.TO) is 42.40%.

The Cost of Debt of Dorel Industries Inc (DII.B.TO) is 6.55%.

	Range	Selected
Cost of equity	34.50% - 50.30%	42.40%
Tax rate	14.20% - 24.40%	19.30%
Cost of debt	6.10% - 7.00%	6.55%
WACC	7.4% - 8.7%	8.0%

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	6.15	7.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	34.50%	50.30%

Tax rate	14.20%	24.40%
Debt/Equity ratio	12.32	12.32
Cost of debt	6.10%	7.00%

After-tax WACC	7.4%	8.7%


Selected WACC	8.0%

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 (42.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (6.15) + 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.