The WACC of Transat AT Inc (TRZ.TO) is 14.8%.
Range | Selected | |
Cost of equity | 53.20% - 90.00% | 71.60% |
Tax rate | 1.30% - 2.00% | 1.65% |
Cost of debt | 4.00% - 20.20% | 12.10% |
WACC | 6.4% - 23.3% | 14.8% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 9.82 | 14.08 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 53.20% | 90.00% |
Tax rate | 1.30% | 2.00% |
Debt/Equity ratio | 19.04 | 19.04 |
Cost of debt | 4.00% | 20.20% |
After-tax WACC | 6.4% | 23.3% |
Selected WACC | 14.8% | |
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 (71.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (9.82) + 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.