200.HK WACC - Weighted Average Cost of Capital

The WACC of Melco International Development Ltd (200.HK) is 9.7%.

The Cost of Equity of Melco International Development Ltd (200.HK) is 8.70%.

The Cost of Debt of Melco International Development Ltd (200.HK) is 9.95%.

	Range	Selected
Cost of equity	6.40% - 11.00%	8.70%
Tax rate	0.40% - 1.50%	0.95%
Cost of debt	5.30% - 14.60%	9.95%
WACC	5.4% - 14.0%	9.7%

WACC

200.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.59	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	11.00%

Tax rate	0.40%	1.50%
Debt/Equity ratio	7.77	7.77
Cost of debt	5.30%	14.60%

After-tax WACC	5.4%	14.0%


Selected WACC	9.7%

200.HK'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 200.HK:

cost_of_equity (8.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.59) + 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.