The WACC of Muehlhan AG (M4N.DE) is 6.2%.
| Range | Selected | |
| Cost of equity | 6.30% - 11.10% | 8.70% |
| Tax rate | 30.80% - 32.90% | 31.85% |
| Cost of debt | 5.30% - 5.70% | 5.50% |
| WACC | 5.0% - 7.5% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.68 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.30% | 11.10% |
| Tax rate | 30.80% | 32.90% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.30% | 5.70% |
| After-tax WACC | 5.0% | 7.5% |
| Selected WACC | 6.2% | |
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 M4N.DE:
cost_of_equity (8.70%) = risk_free_rate (2.85%) + equity_risk_premium (6.00%) * adjusted_beta (0.68) + 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.