TSL.TO WACC - Weighted Average Cost of Capital

The WACC of Tree Island Steel Ltd (TSL.TO) is 6.7%.

The Cost of Equity of Tree Island Steel Ltd (TSL.TO) is 7.45%.

The Cost of Debt of Tree Island Steel Ltd (TSL.TO) is 6.70%.

	Range	Selected
Cost of equity	6.10% - 8.80%	7.45%
Tax rate	24.10% - 27.50%	25.80%
Cost of debt	6.40% - 7.00%	6.70%
WACC	5.8% - 7.7%	6.7%

WACC

TSL.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.58	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	8.80%

Tax rate	24.10%	27.50%
Debt/Equity ratio	0.41	0.41
Cost of debt	6.40%	7.00%

After-tax WACC	5.8%	7.7%


Selected WACC	6.7%

TSL.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 TSL.TO:

cost_of_equity (7.45%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.