MGRC
McGrath RentCorp
Price:  
107.90 
USD
Volume:  
120,144.00
United States | Trading Companies & Distributors
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

MGRC WACC - Weighted Average Cost of Capital

The WACC of McGrath RentCorp (MGRC) is 7.4%.

The Cost of Equity of McGrath RentCorp (MGRC) is 8.05%.
The Cost of Debt of McGrath RentCorp (MGRC) is 5.60%.

Range Selected
Cost of equity 6.90% - 9.20% 8.05%
Tax rate 24.40% - 25.50% 24.95%
Cost of debt 5.30% - 5.90% 5.60%
WACC 6.4% - 8.4% 7.4%
WACC

MGRC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.65 0.78
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 9.20%
Tax rate 24.40% 25.50%
Debt/Equity ratio 0.22 0.22
Cost of debt 5.30% 5.90%
After-tax WACC 6.4% 8.4%
Selected WACC 7.4%

MGRC'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 MGRC:

cost_of_equity (8.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.65) + 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.