TRZ.TO WACC - Weighted Average Cost of Capital

The WACC of Transat AT Inc (TRZ.TO) is 14.3%.

The Cost of Equity of Transat AT Inc (TRZ.TO) is 64.70%.

The Cost of Debt of Transat AT Inc (TRZ.TO) is 12.10%.

	Range	Selected
Cost of equity	40.90% - 88.50%	64.70%
Tax rate	1.30% - 2.00%	1.65%
Cost of debt	4.00% - 20.20%	12.10%
WACC	5.7% - 22.9%	14.3%

WACC

TRZ.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	7.41	13.82

Additional risk adjustments	0.0%	0.5%
Cost of equity	40.90%	88.50%

Tax rate	1.30%	2.00%
Debt/Equity ratio	20.58	20.58
Cost of debt	4.00%	20.20%

After-tax WACC	5.7%	22.9%


Selected WACC	14.3%

TRZ.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 TRZ.TO:

cost_of_equity (64.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (7.41) + 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.