MCY.NZ WACC - Weighted Average Cost of Capital
The WACC of Mercury NZ Ltd (MCY.NZ) is 9.2%.
| Range | Selected | |
| Cost of equity | 8.9% - 11.6% | 10.25% |
| Tax rate | 16.9% - 17.6% | 17.25% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 7.8% - 10.5% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.89 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 11.6% |
| Tax rate | 16.9% | 17.6% |
| Debt/Equity ratio | 0.23 | 0.23 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 7.8% | 10.5% |
| Selected WACC | 9.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MCY.NZ | Mercury NZ Ltd | 0.23 | 1.01 | 0.85 |
| 2638.HK | HK Electric Investments Ltd | 1.06 | 0.1 | 0.05 |
| 600452.SS | Chongqing Fuling Electric Power Industrial Co Ltd | 0 | 1.04 | 1.04 |
| AST.AX | AusNet Services Ltd | 0.94 | 0.02 | 0.01 |
| CEN.NZ | Contact Energy Ltd | 0.26 | 0.99 | 0.81 |
| CESC.NS | CESC Ltd | 0.7 | 1.46 | 0.92 |
| GNE.NZ | Genesis Energy Ltd | 0.58 | 0.66 | 0.44 |
| IFT.NZ | Infratil Ltd | 0.33 | 0.68 | 0.53 |
| SJVN.NS | SJVN Ltd | 0.58 | 1.59 | 1.07 |
| TORNTPOWER.NS | Torrent Power Ltd | 0.17 | 1.27 | 1.11 |
| Low | High | |
| Unlevered beta | 0.7 | 0.88 |
| Relevered beta | 0.84 | 1.04 |
| Adjusted relevered beta | 0.89 | 1.03 |
MCY.NZ'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 MCY.NZ:
cost_of_equity (10.25%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.89) + 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.