MAIN WACC - Weighted Average Cost of Capital

The WACC of Main Street Capital Corp (MAIN) is 7.4%.

The Cost of Equity of Main Street Capital Corp (MAIN) is 8.40%.

The Cost of Debt of Main Street Capital Corp (MAIN) is 5.50%.

	Range	Selected
Cost of equity	7.10% - 9.70%	8.40%
Tax rate	7.60% - 8.90%	8.25%
Cost of debt	4.90% - 6.10%	5.50%
WACC	6.3% - 8.4%	7.4%

WACC

MAIN WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.71	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.70%

Tax rate	7.60%	8.90%
Debt/Equity ratio	0.43	0.43
Cost of debt	4.90%	6.10%

After-tax WACC	6.3%	8.4%


Selected WACC	7.4%

MAIN'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 MAIN:

cost_of_equity (8.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.71) + 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.