RCH.TO WACC - Weighted Average Cost of Capital

The WACC of Richelieu Hardware Ltd (RCH.TO) is 8.2%.

The Cost of Equity of Richelieu Hardware Ltd (RCH.TO) is 8.85%.

The Cost of Debt of Richelieu Hardware Ltd (RCH.TO) is 4.25%.

	Range	Selected
Cost of equity	7.30% - 10.40%	8.85%
Tax rate	26.80% - 27.00%	26.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.8% - 9.5%	8.2%

WACC

RCH.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.82	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	10.40%

Tax rate	26.80%	27.00%
Debt/Equity ratio	0.13	0.13
Cost of debt	4.00%	4.50%

After-tax WACC	6.8%	9.5%


Selected WACC	8.2%

RCH.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 RCH.TO:

cost_of_equity (8.85%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.82) + 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.