MA
Mastercard Inc
Price:  
561.12 
USD
Volume:  
2,130,866.00
United States | IT Services
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Mastercard WACC - Weighted Average Cost of Capital

The WACC of Mastercard Inc (MA) is 7.6%.

The Cost of Equity of Mastercard Inc (MA) is 7.75%.
The Cost of Debt of Mastercard Inc (MA) is 5.00%.

Range Selected
Cost of equity 6.50% - 9.00% 7.75%
Tax rate 15.70% - 16.40% 16.05%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.4% - 8.8% 7.6%
WACC

Mastercard WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.74
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 9.00%
Tax rate 15.70% 16.40%
Debt/Equity ratio 0.04 0.04
Cost of debt 5.00% 5.00%
After-tax WACC 6.4% 8.8%
Selected WACC 7.6%

Mastercard'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 Mastercard:

cost_of_equity (7.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.