MEC
Mayville Engineering Company Inc
Price:  
16.80 
USD
Volume:  
63,410.00
United States | Machinery
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MEC WACC - Weighted Average Cost of Capital

The WACC of Mayville Engineering Company Inc (MEC) is 10.1%.

The Cost of Equity of Mayville Engineering Company Inc (MEC) is 10.55%.
The Cost of Debt of Mayville Engineering Company Inc (MEC) is 10.10%.

Range Selected
Cost of equity 9.10% - 12.00% 10.55%
Tax rate 18.70% - 21.20% 19.95%
Cost of debt 7.80% - 12.40% 10.10%
WACC 8.6% - 11.6% 10.1%
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 1.14 1.28
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.10% 12.00%
Tax rate 18.70% 21.20%
Debt/Equity ratio 0.24 0.24
Cost of debt 7.80% 12.40%
After-tax WACC 8.6% 11.6%
Selected WACC 10.1%

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 (10.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + 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.