VMH.U.TO
VM Hotel Acquisition Corp
Price:  
9.95 
USD
Volume:  
330.00
Canada | N/A
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VMH.U.TO WACC - Weighted Average Cost of Capital

The WACC of VM Hotel Acquisition Corp (VMH.U.TO) is 8.7%.

The Cost of Equity of VM Hotel Acquisition Corp (VMH.U.TO) is 9.00%.
The Cost of Debt of VM Hotel Acquisition Corp (VMH.U.TO) is 5.00%.

Range Selected
Cost of equity 8.00% - 10.00% 9.00%
Tax rate 17.00% - 25.50% 21.25%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.8% - 9.7% 8.7%
WACC

VMH.U.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.05 1.05
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 10.00%
Tax rate 17.00% 25.50%
Debt/Equity ratio 0.06 0.06
Cost of debt 5.00% 5.00%
After-tax WACC 7.8% 9.7%
Selected WACC 8.7%

VMH.U.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 VMH.U.TO:

cost_of_equity (9.00%) = risk_free_rate (3.45%) + equity_risk_premium (5.10%) * adjusted_beta (1.05) + 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.