MERC.L
Mercia Asset Management PLC
Price:  
28.90 
GBP
Volume:  
206,051.00
United Kingdom | Capital Markets
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MERC.L WACC - Weighted Average Cost of Capital

The WACC of Mercia Asset Management PLC (MERC.L) is 8.6%.

The Cost of Equity of Mercia Asset Management PLC (MERC.L) is 8.60%.
The Cost of Debt of Mercia Asset Management PLC (MERC.L) is 4.75%.

Range Selected
Cost of equity 7.50% - 9.70% 8.60%
Tax rate 3.30% - 5.80% 4.55%
Cost of debt 4.60% - 4.90% 4.75%
WACC 7.5% - 9.6% 8.6%
WACC

MERC.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.59 0.67
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.50% 9.70%
Tax rate 3.30% 5.80%
Debt/Equity ratio 0.01 0.01
Cost of debt 4.60% 4.90%
After-tax WACC 7.5% 9.6%
Selected WACC 8.6%

MERC.L'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 MERC.L:

cost_of_equity (8.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.59) + 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.