MCEM WACC - Weighted Average Cost of Capital

The WACC of Monarch Cement Co (MCEM) is 7.6%.

The Cost of Equity of Monarch Cement Co (MCEM) is 11.80%.

The Cost of Debt of Monarch Cement Co (MCEM) is 4.50%.

	Range	Selected
Cost of equity	9.40% - 14.20%	11.80%
Tax rate	20.60% - 21.70%	21.15%
Cost of debt	4.50% - 4.50%	4.50%
WACC	6.5% - 8.8%	7.6%

WACC

MCEM WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.2	1.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	14.20%

Tax rate	20.60%	21.70%
Debt/Equity ratio	1	1
Cost of debt	4.50%	4.50%

After-tax WACC	6.5%	8.8%


Selected WACC	7.6%

MCEM'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 MCEM:

cost_of_equity (11.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.2) + 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.