GIM WACC - Weighted Average Cost of Capital
The WACC of Templeton Global Income Fund (GIM) is 6.7%.
| Range | Selected | |
| Cost of equity | 7.8% - 11.5% | 9.65% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.7% - 7.6% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 0.72 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.8% | 11.5% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.7% | 7.6% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GIM | Templeton Global Income Fund | 1.03 | 3.55 | 2.02 |
| CGI.TO | Canadian General Investments Ltd | 0.26 | 1.2 | 1.01 |
| EVT.TO | Economic Investment Trust Ltd | 1.13 | 0.73 | 0.4 |
| FRMO | FRMO Corp | 0 | 0.67 | 0.67 |
| NID | Nuveen Intermediate Duration Municipal Term Fund | 0.05 | 0.25 | 0.24 |
| Low | High | |
| Unlevered beta | 0.56 | 0.8 |
| Relevered beta | 0.58 | 1.09 |
| Adjusted relevered beta | 0.72 | 1.06 |
GIM'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 GIM:
cost_of_equity (9.65%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.72) + 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.