The WACC of McBride PLC (MCB.L) is 13.9%.
| Range | Selected | |
| Cost of equity | 7.00% - 9.40% | 8.20% |
| Tax rate | 30.70% - 47.60% | 39.15% |
| Cost of debt | 4.60% - 81.50% | 43.05% |
| WACC | 5.5% - 22.3% | 13.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.51 | 0.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 9.40% |
| Tax rate | 30.70% | 47.60% |
| Debt/Equity ratio | 0.64 | 0.64 |
| Cost of debt | 4.60% | 81.50% |
| After-tax WACC | 5.5% | 22.3% |
| Selected WACC | 13.9% | |
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 MCB.L:
cost_of_equity (8.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.51) + 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.