MEDP WACC - Weighted Average Cost of Capital
The WACC of Medpace Holdings Inc (MEDP) is 7.2%.
| Range | Selected | |
| Cost of equity | 8.6% - 12.7% | 10.65% |
| Tax rate | 13.5% - 14.2% | 13.85% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 6.2% - 8.3% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.03 | 1.39 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 12.7% |
| Tax rate | 13.5% | 14.2% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 6.2% | 8.3% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MEDP | Medpace Holdings Inc | 0.92 | 0.95 | 0.53 |
| ADPT | Adaptive Biotechnologies Corp | 0.07 | 1.48 | 1.39 |
| ARCH.V | Arch Biopartners Inc | 0.02 | 0.73 | 0.71 |
| CDXC | Chromadex Corp | 0 | 0.57 | 0.57 |
| CDXS | Codexis Inc | 0.13 | 1.98 | 1.79 |
| EVIO | EVIO Inc | 595.18 | 0 | 0 |
| ICLR | ICON PLC | 0.29 | 0.67 | 0.53 |
| PRAH | PRA Health Sciences Inc | 0.12 | 1.31 | 1.19 |
| PSNL | Personalis Inc | 0 | 1.07 | 1.07 |
| Low | High | |
| Unlevered beta | 0.6 | 0.99 |
| Relevered beta | 1.04 | 1.58 |
| Adjusted relevered beta | 1.03 | 1.39 |
MEDP'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 MEDP:
cost_of_equity (10.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.03) + 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.