The WACC of Magadanenergo PAO (MAGE.ME) is 10.9%.
| Range | Selected | |
| Cost of equity | 20.30% - 23.20% | 21.75% |
| Tax rate | 20.10% - 22.60% | 21.35% |
| Cost of debt | 4.00% - 17.30% | 10.65% |
| WACC | 6.6% - 15.3% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 15.8% | 16.3% |
| Equity market risk premium | 11.7% | 12.7% |
| Adjusted beta | 0.38 | 0.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.30% | 23.20% |
| Tax rate | 20.10% | 22.60% |
| Debt/Equity ratio | 4.09 | 4.09 |
| Cost of debt | 4.00% | 17.30% |
| After-tax WACC | 6.6% | 15.3% |
| Selected WACC | 10.9% | |
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 MAGE.ME:
cost_of_equity (21.75%) = risk_free_rate (16.05%) + equity_risk_premium (12.20%) * adjusted_beta (0.38) + 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.