NCH.BK WACC - Weighted Average Cost of Capital

The WACC of NC Housing PCL (NCH.BK) is 6.6%.

The Cost of Equity of NC Housing PCL (NCH.BK) is 9.95%.

The Cost of Debt of NC Housing PCL (NCH.BK) is 6.70%.

	Range	Selected
Cost of equity	7.20% - 12.70%	9.95%
Tax rate	22.20% - 22.90%	22.55%
Cost of debt	6.40% - 7.00%	6.70%
WACC	5.6% - 7.6%	6.6%

WACC

NCH.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.63	1.08

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	12.70%

Tax rate	22.20%	22.90%
Debt/Equity ratio	2.38	2.38
Cost of debt	6.40%	7.00%

After-tax WACC	5.6%	7.6%


Selected WACC	6.6%

NCH.BK'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 NCH.BK:

cost_of_equity (9.95%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.63) + 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.