TCN.TO WACC - Weighted Average Cost of Capital

The WACC of Tricon Residential Inc (TCN.TO) is 9.4%.

The Cost of Equity of Tricon Residential Inc (TCN.TO) is 7.20%.

The Cost of Debt of Tricon Residential Inc (TCN.TO) is 13.15%.

	Range	Selected
Cost of equity	5.50% - 8.90%	7.20%
Tax rate	17.90% - 21.30%	19.60%
Cost of debt	11.40% - 14.90%	13.15%
WACC	8.0% - 10.8%	9.4%

WACC

TCN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.36	0.69

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.50%	8.90%

Tax rate	17.90%	21.30%
Debt/Equity ratio	1.86	1.86
Cost of debt	11.40%	14.90%

After-tax WACC	8.0%	10.8%


Selected WACC	9.4%

TCN.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 TCN.TO:

cost_of_equity (7.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.36) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.