The WACC of Medigene AG (MDG1.DE) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.50% - 8.40% | 6.95% |
| Tax rate | 2.20% - 2.70% | 2.45% |
| Cost of debt | 6.80% - 7.00% | 6.90% |
| WACC | 6.1% - 7.6% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.23 | 0.5 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.50% | 8.40% |
| Tax rate | 2.20% | 2.70% |
| Debt/Equity ratio | 1.07 | 1.07 |
| Cost of debt | 6.80% | 7.00% |
| After-tax WACC | 6.1% | 7.6% |
| Selected WACC | 6.8% | |
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 MDG1.DE:
cost_of_equity (6.95%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.23) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.