MCPH WACC - Weighted Average Cost of Capital
The WACC of Midland Capital Holdings Corp (MCPH) is 5.0%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.6% | 6.65% |
| Tax rate | 33.9% - 34.0% | 33.95% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.5% - 5.4% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.39 | 0.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.6% |
| Tax rate | 33.9% | 34.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.5% | 5.4% |
| Selected WACC | 5.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MCPH | Midland Capital Holdings Corp | 0.98 | 0.44 | 0.27 |
| AGM | Federal Agricultural Mortgage Corp | 14.77 | 0.82 | 0.08 |
| ATAX | America First Multifamily Investors LP | 2.7 | 0.64 | 0.23 |
| CIBN | Community Investors Bancorp Inc | 0.59 | 0.05 | 0.04 |
| CNNB | Cincinnati Bancorp Inc | 0.04 | 0.02 | 0.02 |
| DVLN | DVL Inc | 2.01 | 0.99 | 0.43 |
| FNFI | First Niles Financial Inc | 0.01 | 0.07 | 0.07 |
| PFC | Premier Financial Corp (OHIO) | 0.09 | 0.88 | 0.83 |
| PPSF | Peoples Sidney Financial Corp | 0.05 | -0.52 | -0.5 |
| SFBI | SFSB Inc | 3.26 | 1.59 | 0.5 |
| VRTA | Vestin Realty Mortgage I Inc | 0.74 | 1.67 | 1.12 |
| Low | High | |
| Unlevered beta | 0.08 | 0.27 |
| Relevered beta | 0.09 | 0.22 |
| Adjusted relevered beta | 0.39 | 0.48 |
MCPH'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 MCPH:
cost_of_equity (6.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.39) + 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.