KBL.TO WACC - Weighted Average Cost of Capital

The WACC of K-Bro Linen Inc (KBL.TO) is 7.0%.

The Cost of Equity of K-Bro Linen Inc (KBL.TO) is 8.20%.

The Cost of Debt of K-Bro Linen Inc (KBL.TO) is 6.80%.

	Range	Selected
Cost of equity	6.70% - 9.70%	8.20%
Tax rate	25.40% - 27.50%	26.45%
Cost of debt	6.30% - 7.30%	6.80%
WACC	5.9% - 8.0%	7.0%

WACC

KBL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.7	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.70%

Tax rate	25.40%	27.50%
Debt/Equity ratio	0.62	0.62
Cost of debt	6.30%	7.30%

After-tax WACC	5.9%	8.0%


Selected WACC	7.0%

KBL.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 KBL.TO:

cost_of_equity (8.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.7) + 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.