TRZ.TO
Transat AT Inc
Price:  
2.83 
CAD
Volume:  
5,987.00
Canada | Hotels, Restaurants & Leisure
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TRZ.TO WACC - Weighted Average Cost of Capital

The WACC of Transat AT Inc (TRZ.TO) is 14.8%.

The Cost of Equity of Transat AT Inc (TRZ.TO) is 71.60%.
The Cost of Debt of Transat AT Inc (TRZ.TO) is 12.10%.

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%
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 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%

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 (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.