MDC
MDC Holdings Inc
Price:  
62.98 
USD
Volume:  
6,414,210.00
United States | Household Durables
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MDC WACC - Weighted Average Cost of Capital

The WACC of MDC Holdings Inc (MDC) is 6.4%.

The Cost of Equity of MDC Holdings Inc (MDC) is 7.55%.
The Cost of Debt of MDC Holdings Inc (MDC) is 4.25%.

Range Selected
Cost of equity 6.60% - 8.50% 7.55%
Tax rate 23.00% - 23.70% 23.35%
Cost of debt 4.00% - 4.50% 4.25%
WACC 5.6% - 7.2% 6.4%
WACC

MDC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.59 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 8.50%
Tax rate 23.00% 23.70%
Debt/Equity ratio 0.36 0.36
Cost of debt 4.00% 4.50%
After-tax WACC 5.6% 7.2%
Selected WACC 6.4%

MDC'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 MDC:

cost_of_equity (7.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + 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.