The WACC of Global Real Estate & E-Commerce Dividend Fund (GEC.UN.TO) is 7.8%.
| Range | Selected | |
| Cost of equity | 7.10% - 9.00% | 8.05% |
| Tax rate | 1.10% - 1.30% | 1.20% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.9% - 8.6% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.79 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 9.00% |
| Tax rate | 1.10% | 1.30% |
| Debt/Equity ratio | 0.1 | 0.1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.9% | 8.6% |
| Selected WACC | 7.8% | |
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 GEC.UN.TO:
cost_of_equity (8.05%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.79) + 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.