ZZZ.TO
Sleep Country Canada Holdings Inc
Price:  
34.99 
CAD
Volume:  
22,070.00
Canada | Specialty Retail
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ZZZ.TO WACC - Weighted Average Cost of Capital

The WACC of Sleep Country Canada Holdings Inc (ZZZ.TO) is 6.2%.

The Cost of Equity of Sleep Country Canada Holdings Inc (ZZZ.TO) is 7.40%.
The Cost of Debt of Sleep Country Canada Holdings Inc (ZZZ.TO) is 4.45%.

Range Selected
Cost of equity 6.30% - 8.50% 7.40%
Tax rate 25.50% - 26.40% 25.95%
Cost of debt 4.40% - 4.50% 4.45%
WACC 5.4% - 7.0% 6.2%
WACC

ZZZ.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.61 0.72
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.50%
Tax rate 25.50% 26.40%
Debt/Equity ratio 0.41 0.41
Cost of debt 4.40% 4.50%
After-tax WACC 5.4% 7.0%
Selected WACC 6.2%

ZZZ.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 ZZZ.TO:

cost_of_equity (7.40%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.61) + 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.