TRZ.TO WACC - Weighted Average Cost of Capital

The WACC of Transat AT Inc (TRZ.TO) is 15.2%.

The Cost of Equity of Transat AT Inc (TRZ.TO) is 41.05%.

The Cost of Debt of Transat AT Inc (TRZ.TO) is 13.60%.

	Range	Selected
Cost of equity	31.30% - 50.80%	41.05%
Tax rate	1.00% - 1.60%	1.30%
Cost of debt	4.00% - 23.20%	13.60%
WACC	5.7% - 24.6%	15.2%

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	5.52	7.64

Additional risk adjustments	0.0%	0.5%
Cost of equity	31.30%	50.80%

Tax rate	1.00%	1.60%
Debt/Equity ratio	14.49	14.49
Cost of debt	4.00%	23.20%

After-tax WACC	5.7%	24.6%


Selected WACC	15.2%

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 (41.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (5.52) + 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.