CHR.TO WACC - Weighted Average Cost of Capital
The WACC of Chorus Aviation Inc (CHR.TO) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.6% - 10.2% | 8.4% |
| Tax rate | 26.3% - 27.8% | 27.05% |
| Cost of debt | 4.7% - 11.7% | 8.2% |
| WACC | 5.0% - 9.3% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.67 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.6% | 10.2% |
| Tax rate | 26.3% | 27.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.7% | 11.7% |
| After-tax WACC | 5.0% | 9.3% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CHR.TO | Chorus Aviation Inc | 1 | 1.04 | 0.6 |
| ALGT | Allegiant Travel Co | 2.07 | 1.38 | 0.55 |
| AZUL | Azul SA | 19.78 | 0.16 | 0.01 |
| CPA | Copa Holdings SA | 0.49 | 0.55 | 0.4 |
| EIF.TO | Exchange Income Corp | 0.84 | 0.97 | 0.6 |
| HA | Hawaiian Holdings Inc | 1.76 | 1.81 | 0.79 |
| JET.V | Global Crossing Airlines Group Inc | 0.03 | 0.09 | 0.09 |
| MESA | Mesa Air Group Inc | 13.13 | 1.44 | 0.14 |
| SAVE | Spirit Airlines Inc | 76.94 | 0.81 | 0.01 |
| SKYW | SkyWest Inc | 0.66 | 1.1 | 0.74 |
| Low | High | |
| Unlevered beta | 0.3 | 0.57 |
| Relevered beta | 0.51 | 0.99 |
| Adjusted relevered beta | 0.67 | 0.99 |
CHR.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 CHR.TO:
cost_of_equity (8.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.67) + 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.