Life Time Fitness
An example of the calculation of the weighted-average cost of capital Cost of Equity Riskfree rate Beta Market return Cost of Equity Cost of Debt Rate Taxrate Cost of Debt Amount of Equity Shares Price Value
5.10% 0.95 10.6% 10.33%
6.85% 35% 4.45%
Amount of Debt Book value Adjustment Value Total Capital
WACC
8.93%
1670
518 1 518 2188
Life Time Fitness
An example of the calculation of the weighted-average cost of capital Cost of Equity Riskfree rate Beta Market return Cost of Equity Cost of Debt Rate Taxrate Cost of Debt Amount of Equity Shares Price Value
5.10% 1.10 10.6% 11.14%
7.35% 35% 4.78%
Amount of Debt Book value Adjustment Value Total Capital
WACC New cost of debt (spread) Old beta Old D/E Unlevered beta New D/E New levered beta
8.76% 1.75% 0.95 0.31 0.79 Bu=Bl/(1+D/E(1-T)) 0.60 1.10 Bl=Bu(1+D/E(1-T))
1370
818 1 818 2188