The WACC of MBH Corporation PLC (M8H.DE) is 6.4%.
| Range | Selected | |
| Cost of equity | 4.40% - 8.50% | 6.45% |
| Tax rate | 11.70% - 14.50% | 13.10% |
| Cost of debt | 6.20% - 8.60% | 7.40% |
| WACC | 5.4% - 7.4% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.34 | 0.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.40% | 8.50% |
| Tax rate | 11.70% | 14.50% |
| Debt/Equity ratio | 14.72 | 14.72 |
| Cost of debt | 6.20% | 8.60% |
| After-tax WACC | 5.4% | 7.4% |
| Selected WACC | 6.4% | |
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 M8H.DE:
cost_of_equity (6.45%) = risk_free_rate (2.85%) + equity_risk_premium (6.00%) * adjusted_beta (0.34) + 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.