MGM
MGM Resorts International
Price:  
31.97 
USD
Volume:  
7,299,788.00
United States | Hotels, Restaurants & Leisure
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MGM WACC - Weighted Average Cost of Capital

The WACC of MGM Resorts International (MGM) is 7.5%.

The Cost of Equity of MGM Resorts International (MGM) is 9.65%.
The Cost of Debt of MGM Resorts International (MGM) is 5.35%.

Range Selected
Cost of equity 8.20% - 11.10% 9.65%
Tax rate 11.90% - 14.50% 13.20%
Cost of debt 5.30% - 5.40% 5.35%
WACC 6.7% - 8.3% 7.5%
WACC

MGM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.93 1.11
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 11.10%
Tax rate 11.90% 14.50%
Debt/Equity ratio 0.74 0.74
Cost of debt 5.30% 5.40%
After-tax WACC 6.7% 8.3%
Selected WACC 7.5%

MGM'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 MGM:

cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.93) + 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.