MEC
Mayville Engineering Company Inc
Price:  
14.36 
USD
Volume:  
155,322.00
United States | Machinery
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MEC WACC - Weighted Average Cost of Capital

The WACC of Mayville Engineering Company Inc (MEC) is 8.8%.

The Cost of Equity of Mayville Engineering Company Inc (MEC) is 9.40%.
The Cost of Debt of Mayville Engineering Company Inc (MEC) is 8.45%.

Range Selected
Cost of equity 8.00% - 10.80% 9.40%
Tax rate 18.70% - 21.20% 19.95%
Cost of debt 7.80% - 9.10% 8.45%
WACC 7.6% - 10.0% 8.8%
WACC

MEC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.89 1.06
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.00% 10.80%
Tax rate 18.70% 21.20%
Debt/Equity ratio 0.3 0.3
Cost of debt 7.80% 9.10%
After-tax WACC 7.6% 10.0%
Selected WACC 8.8%

MEC'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 MEC:

cost_of_equity (9.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * 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.