MEQ.TO WACC - Weighted Average Cost of Capital
The WACC of Mainstreet Equity Corp (MEQ.TO) is 5.9%.
| Range | Selected | |
| Cost of equity | 6.4% - 8.7% | 7.55% |
| Tax rate | 15.3% - 15.8% | 15.55% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.4% - 6.5% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.64 | 0.74 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.4% | 8.7% |
| Tax rate | 15.3% | 15.8% |
| Debt/Equity ratio | 0.93 | 0.93 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.4% | 6.5% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MEQ.TO | Mainstreet Equity Corp | 0.93 | 0.4 | 0.22 |
| ARL | American Realty Investors Inc | 0.87 | 1.16 | 0.67 |
| FRPH | FRP Holdings Inc | 0.35 | 0.42 | 0.32 |
| INDT | Indus Realty Trust Inc | 0.25 | 0.46 | 0.38 |
| IVQ.U.TO | Invesque Inc | 3.93 | -0.72 | -0.17 |
| LMRK | Landmark Infrastructure Partners LP | 1.18 | 1 | 0.5 |
| NEN | New England Realty Associates LP | 1.51 | -0.2 | -0.09 |
| NTP | Nam Tai Property Inc | 0.74 | 0.91 | 0.56 |
| TCI | Transcontinental Realty Investors Inc | 0.63 | 0.43 | 0.28 |
| UK | Ucommune International Ltd | 17.9 | 0.47 | 0.03 |
| Low | High | |
| Unlevered beta | 0.26 | 0.35 |
| Relevered beta | 0.46 | 0.61 |
| Adjusted relevered beta | 0.64 | 0.74 |
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 (7.55%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.64) + 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.