MDI.WA WACC - Weighted Average Cost of Capital

The WACC of MDI Energia SA (MDI.WA) is 8.6%.

The Cost of Equity of MDI Energia SA (MDI.WA) is 8.65%.

The Cost of Debt of MDI Energia SA (MDI.WA) is 5.95%.

	Range	Selected
Cost of equity	7.80% - 9.50%	8.65%
Tax rate	16.70% - 18.90%	17.80%
Cost of debt	4.90% - 7.00%	5.95%
WACC	7.7% - 9.5%	8.6%

WACC

MDI.WA WACC calculation

Category	Low	High

Long-term bond rate	5.5%	6.0%
Equity market risk premium	6.3%	7.3%
Adjusted beta	0.36	0.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	9.50%

Tax rate	16.70%	18.90%
Debt/Equity ratio	0	0
Cost of debt	4.90%	7.00%

After-tax WACC	7.7%	9.5%


Selected WACC	8.6%

MDI.WA'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 MDI.WA:

cost_of_equity (8.65%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.36) + 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.