SGR.R.TO WACC - Weighted Average Cost of Capital

The WACC of Slate Grocery REIT (SGR.R.TO) is 6.4%.

The Cost of Equity of Slate Grocery REIT (SGR.R.TO) is 9.20%.

The Cost of Debt of Slate Grocery REIT (SGR.R.TO) is 5.70%.

	Range	Selected
Cost of equity	7.90% - 10.50%	9.20%
Tax rate	25.00% - 27.50%	26.25%
Cost of debt	4.00% - 7.40%	5.70%
WACC	5.2% - 7.7%	6.4%

WACC

SGR.R.TO WACC calculation

Category	Low	High

Long-term bond rate	3.4%	3.9%
Equity market risk premium	4.7%	5.7%
Adjusted beta	0.95	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.50%

Tax rate	25.00%	27.50%
Debt/Equity ratio	1.21	1.21
Cost of debt	4.00%	7.40%

After-tax WACC	5.2%	7.7%


Selected WACC	6.4%

SGR.R.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 SGR.R.TO:

cost_of_equity (9.20%) = risk_free_rate (3.65%) + equity_risk_premium (5.20%) * adjusted_beta (0.95) + 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.