MFC.TO
Manulife Financial Corp
Price:  
44.77 
CAD
Volume:  
7,591,358.00
Canada | Insurance
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MFC.TO WACC - Weighted Average Cost of Capital

The WACC of Manulife Financial Corp (MFC.TO) is 7.2%.

The Cost of Equity of Manulife Financial Corp (MFC.TO) is 7.75%.
The Cost of Debt of Manulife Financial Corp (MFC.TO) is 5.00%.

Range Selected
Cost of equity 6.40% - 9.10% 7.75%
Tax rate 16.20% - 17.30% 16.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.0% - 8.3% 7.2%
WACC

MFC.TO WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.63 0.81
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.10%
Tax rate 16.20% 17.30%
Debt/Equity ratio 0.18 0.18
Cost of debt 5.00% 5.00%
After-tax WACC 6.0% 8.3%
Selected WACC 7.2%

MFC.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 MFC.TO:

cost_of_equity (7.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.63) + 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.