The WACC of Macro Enterprises Inc (MCR.V) is 9.3%.
| Range | Selected | |
| Cost of equity | 9.50% - 12.00% | 10.75% |
| Tax rate | 18.80% - 24.00% | 21.40% |
| Cost of debt | 4.30% - 10.50% | 7.40% |
| WACC | 7.8% - 10.8% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.33 | 1.36 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 12.00% |
| Tax rate | 18.80% | 24.00% |
| Debt/Equity ratio | 0.4 | 0.4 |
| Cost of debt | 4.30% | 10.50% |
| After-tax WACC | 7.8% | 10.8% |
| Selected WACC | 9.3% | |
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 MCR.V:
cost_of_equity (10.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.20%) * adjusted_beta (1.33) + 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.