MAV WACC - Weighted Average Cost of Capital

The WACC of Pioneer Municipal High Income Advantage Trust (MAV) is 8.3%.

The Cost of Equity of Pioneer Municipal High Income Advantage Trust (MAV) is 11.15%.

The Cost of Debt of Pioneer Municipal High Income Advantage Trust (MAV) is 7.50%.

	Range	Selected
Cost of equity	9.90% - 12.40%	11.15%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	7.50% - 7.50%	7.50%
WACC	7.7% - 9.0%	8.3%

WACC

MAV WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.32	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	12.40%

Tax rate	26.20%	27.00%
Debt/Equity ratio	1	1
Cost of debt	7.50%	7.50%

After-tax WACC	7.7%	9.0%


Selected WACC	8.3%

MAV'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 MAV:

cost_of_equity (11.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.32) + 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.