NCH.BK WACC - Weighted Average Cost of Capital

The WACC of NC Housing PCL (NCH.BK) is 9.9%.

The Cost of Equity of NC Housing PCL (NCH.BK) is 7.20%.

The Cost of Debt of NC Housing PCL (NCH.BK) is 14.50%.

	Range	Selected
Cost of equity	6.00% - 8.40%	7.20%
Tax rate	22.20% - 22.90%	22.55%
Cost of debt	6.40% - 22.60%	14.50%
WACC	5.3% - 14.5%	9.9%

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	0.47	0.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	8.40%

Tax rate	22.20%	22.90%
Debt/Equity ratio	2.16	2.16
Cost of debt	6.40%	22.60%

After-tax WACC	5.3%	14.5%


Selected WACC	9.9%

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 (7.20%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.47) + 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.