EQR
Equity Residential
Price:  
70.14 
USD
Volume:  
3,122,807.00
United States | Equity Real Estate Investment Trusts (REITs)
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EQR WACC - Weighted Average Cost of Capital

The WACC of Equity Residential (EQR) is 7.1%.

The Cost of Equity of Equity Residential (EQR) is 7.75%.
The Cost of Debt of Equity Residential (EQR) is 5.05%.

Range Selected
Cost of equity 6.60% - 8.90% 7.75%
Tax rate 0.10% - 0.10% 0.10%
Cost of debt 4.00% - 6.10% 5.05%
WACC 6.0% - 8.2% 7.1%
WACC

EQR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.6 0.71
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 8.90%
Tax rate 0.10% 0.10%
Debt/Equity ratio 0.32 0.32
Cost of debt 4.00% 6.10%
After-tax WACC 6.0% 8.2%
Selected WACC 7.1%

EQR'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 EQR:

cost_of_equity (7.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.6) + 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.