MGPI
MGP Ingredients Inc
Price:  
29.57 
USD
Volume:  
349,275.00
United States | Beverages
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MGPI WACC - Weighted Average Cost of Capital

The WACC of MGP Ingredients Inc (MGPI) is 6.1%.

The Cost of Equity of MGP Ingredients Inc (MGPI) is 7.35%.
The Cost of Debt of MGP Ingredients Inc (MGPI) is 4.75%.

Range Selected
Cost of equity 6.20% - 8.50% 7.35%
Tax rate 24.00% - 24.70% 24.35%
Cost of debt 4.70% - 4.80% 4.75%
WACC 5.3% - 6.8% 6.1%
WACC

MGPI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.51 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.20% 8.50%
Tax rate 24.00% 24.70%
Debt/Equity ratio 0.51 0.51
Cost of debt 4.70% 4.80%
After-tax WACC 5.3% 6.8%
Selected WACC 6.1%

MGPI'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 MGPI:

cost_of_equity (7.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.51) + 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.