MFA
MFA Financial Inc
Price:  
10.20 
USD
Volume:  
896,339.00
United States | Mortgage Real Estate Investment Trusts (REITs)
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MFA WACC - Weighted Average Cost of Capital

The WACC of MFA Financial Inc (MFA) is 10.1%.

The Cost of Equity of MFA Financial Inc (MFA) is 7.70%.
The Cost of Debt of MFA Financial Inc (MFA) is 14.30%.

Range Selected
Cost of equity 6.40% - 9.00% 7.70%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.70% - 23.90% 14.30%
WACC 3.7% - 16.6% 10.1%
WACC

MFA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.00%
Tax rate 26.20% 27.00%
Debt/Equity ratio 8.74 8.74
Cost of debt 4.70% 23.90%
After-tax WACC 3.7% 16.6%
Selected WACC 10.1%

MFA'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 MFA:

cost_of_equity (7.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.