MRG.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Morguard North American Residential Real Estate Investment Trust (MRG.UN.TO) is 6.3%.

The Cost of Equity of Morguard North American Residential Real Estate Investment Trust (MRG.UN.TO) is 11.05%.

The Cost of Debt of Morguard North American Residential Real Estate Investment Trust (MRG.UN.TO) is 5.40%.

	Range	Selected
Cost of equity	8.50% - 13.60%	11.05%
Tax rate	8.70% - 15.50%	12.10%
Cost of debt	4.00% - 6.80%	5.40%
WACC	4.9% - 7.7%	6.3%

WACC

MRG.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.06	1.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.50%	13.60%

Tax rate	8.70%	15.50%
Debt/Equity ratio	2.91	2.91
Cost of debt	4.00%	6.80%

After-tax WACC	4.9%	7.7%


Selected WACC	6.3%

MRG.UN.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 MRG.UN.TO:

cost_of_equity (11.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.06) + 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.