200.HK WACC - Weighted Average Cost of Capital

The WACC of Melco International Development Ltd (200.HK) is 11.9%.

The Cost of Equity of Melco International Development Ltd (200.HK) is 9.50%.

The Cost of Debt of Melco International Development Ltd (200.HK) is 12.25%.

	Range	Selected
Cost of equity	7.50% - 11.50%	9.50%
Tax rate	0.40% - 1.50%	0.95%
Cost of debt	4.60% - 19.90%	12.25%
WACC	4.8% - 18.9%	11.9%

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	0.77	1.09

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.50%	11.50%

Tax rate	0.40%	1.50%
Debt/Equity ratio	11.04	11.04
Cost of debt	4.60%	19.90%

After-tax WACC	4.8%	18.9%


Selected WACC	11.9%

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 (9.50%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.77) + 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.