The WACC of Meten Edtechx Education Group Ltd (METX) is 5.3%.
| Range | Selected | |
| Cost of equity | 11.70% - 22.50% | 17.10% |
| Tax rate | 0.90% - 18.20% | 9.55% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.4% - 5.2% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.5 | 2.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.70% | 22.50% |
| Tax rate | 0.90% | 18.20% |
| Debt/Equity ratio | 15.18 | 15.18 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.4% | 5.2% |
| Selected WACC | 5.3% | |
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 METX:
cost_of_equity (17.10%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.5) + 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.