RCH.TO
Richelieu Hardware Ltd
Price:  
35.91 
CAD
Volume:  
13,720.00
Canada | Trading Companies & Distributors
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

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 8.90%.
The Cost of Debt of Richelieu Hardware Ltd (RCH.TO) is 4.25%.

Range Selected
Cost of equity 7.40% - 10.40% 8.90%
Tax rate 26.80% - 27.00% 26.90%
Cost of debt 4.00% - 4.50% 4.25%
WACC 6.9% - 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 0.84 1.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 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 6.9% 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 (8.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.84) + 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.