TA
Travelcenters of America Inc
Price:  
86 
USD
Volume:  
1,108,900
United States | Specialty Retail

TA WACC - Weighted Average Cost of Capital

The WACC of Travelcenters of America Inc (TA) is 7.3%.

The Cost of Equity of Travelcenters of America Inc (TA) is 8.35%.
The Cost of Debt of Travelcenters of America Inc (TA) is 6.7%.

RangeSelected
Cost of equity7.3% - 9.4%8.35%
Tax rate23.5% - 26.1%24.8%
Cost of debt5.1% - 8.3%6.7%
WACC6.3% - 8.4%7.3%
WACC

TA WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.750.81
Additional risk adjustments0.0%0.5%
Cost of equity7.3%9.4%
Tax rate23.5%26.1%
Debt/Equity ratio
0.440.44
Cost of debt5.1%8.3%
After-tax WACC6.3%8.4%
Selected WACC7.3%

TA'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 TA:

cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.