SOT.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Slate Office REIT (SOT.UN.TO) is 8.5%.

The Cost of Equity of Slate Office REIT (SOT.UN.TO) is 28.65%.

The Cost of Debt of Slate Office REIT (SOT.UN.TO) is 8.05%.

	Range	Selected
Cost of equity	23.90% - 33.40%	28.65%
Tax rate	1.20% - 2.60%	1.90%
Cost of debt	4.40% - 11.70%	8.05%
WACC	5.0% - 12.1%	8.5%

WACC

SOT.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	4.06	4.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	23.90%	33.40%

Tax rate	1.20%	2.60%
Debt/Equity ratio	29.33	29.33
Cost of debt	4.40%	11.70%

After-tax WACC	5.0%	12.1%


Selected WACC	8.5%

SOT.UN.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 SOT.UN.TO:

cost_of_equity (28.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (4.06) + 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.