MEQ.TO WACC - Weighted Average Cost of Capital

The WACC of Mainstreet Equity Corp (MEQ.TO) is 6.5%.

The Cost of Equity of Mainstreet Equity Corp (MEQ.TO) is 8.55%.

The Cost of Debt of Mainstreet Equity Corp (MEQ.TO) is 5.00%.

	Range	Selected
Cost of equity	7.20% - 9.90%	8.55%
Tax rate	15.30% - 15.80%	15.55%
Cost of debt	5.00% - 5.00%	5.00%
WACC	5.8% - 7.2%	6.5%

WACC

MEQ.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.8	0.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	9.90%

Tax rate	15.30%	15.80%
Debt/Equity ratio	0.91	0.91
Cost of debt	5.00%	5.00%

After-tax WACC	5.8%	7.2%


Selected WACC	6.5%

MEQ.TO'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 MEQ.TO:

cost_of_equity (8.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.8) + 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.