HOM.U.TO WACC - Weighted Average Cost of Capital

The WACC of BSR Real Estate Investment Trust (HOM.U.TO) is 7.4%.

The Cost of Equity of BSR Real Estate Investment Trust (HOM.U.TO) is 8.40%.

The Cost of Debt of BSR Real Estate Investment Trust (HOM.U.TO) is 9.45%.

	Range	Selected
Cost of equity	7.10% - 9.70%	8.40%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	4.00% - 14.90%	9.45%
WACC	4.2% - 10.6%	7.4%

WACC

HOM.U.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.85	0.99

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.70%

Tax rate	25.90%	26.50%
Debt/Equity ratio	2.36	2.36
Cost of debt	4.00%	14.90%

After-tax WACC	4.2%	10.6%


Selected WACC	7.4%

HOM.U.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 HOM.U.TO:

cost_of_equity (8.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.