disCount Rate  gRoss maRgins inCluding Raw mateRial pRiCes and CuRRenCy fluCtuations inflation maRket shaRe duRing the pRojeCtion peRiod gRowth Rate used to extRapolate Cash flows beyond the pRojeCtion peRiod Costs to sell sensitivityto Changes in assumptions The discount rate reflects the current market assessment of the risk specific to comparable companies of High Liner. The discount  rate was based on the average weighted average cost of equity and cost of debt for comparable companies to High Liner within the  industry. The cost of equity was calculated using the capital asset pricing model. The debt component of the WACC was determined  by using an after-tax cost of debt.  Gross margins are based on average values achieved in the three years preceding the start of the projection period. These are  increased over the projection period for anticipated efficiency improvements. The projected gross margins are then updated to reflect  anticipated future changes in the price of inputs (primarily raw materials and commodity products used in processing, such as  cooking oil, wheat, fuel and boxboard), which are obtained from published indices for the countries from which raw materials are  sourced, as well as forward-looking data relating to specific commodities. Forecast figures are used where data is publicly available,  otherwise past actual raw material price movements have been used as an indicator of future price movements combined with  Management’s industry experience and analysis of the seafood and commodity markets. Estimates are obtained from published indices for the countries in which they operate.  These assumptions are important because, as well as using industry data for growth rates, management assesses how the unit’s  position, relative to its competitors, might change over the projection period. Management expects the Company’s share of the  Canadian frozen seafood market to be stable over the projection period, whereas Management expects the U.S. position, relative to its  competitors, to continue to strengthen. Growth rates used to extrapolate the Company’s projection were determined using published industry growth rates in combination  with inflation assumptions and the input of each management group based on historical trend analysis and future expectations of  growth. The growth rates used in the 5-year projection declined by 0.5% each year until the terminal period where the growth rate  was assumed to be equal to inflation. Each CGU’s costs to sell have been estimated to approximate 3% of the CGU’s enterprise value. The costs to sell reflect the incremental costs, excluding finance costs and income taxes, that would be directly attributable to the disposal of a CGU, including  legal costs, marketing costs, costs of removing assets and direct incremental costs incurred in preparing the CGU for sale.  With regards to the assessment of the fair value less costs to sell for each of the cash-generating units, management believes that no  reasonably possible change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its  recoverable amount. 74 HIGH lIneR FooDS InCoRpoRAteD