The WACC of Mhp Se (MHPC.L) is 10.1%.
| Range | Selected | |
| Cost of equity | 16.30% - 22.90% | 19.60% |
| Tax rate | 7.80% - 11.20% | 9.50% |
| Cost of debt | 8.30% - 9.20% | 8.75% |
| WACC | 9.2% - 10.9% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 2.25 | 2.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.30% | 22.90% |
| Tax rate | 7.80% | 11.20% |
| Debt/Equity ratio | 4.46 | 4.46 |
| Cost of debt | 8.30% | 9.20% |
| After-tax WACC | 9.2% | 10.9% |
| Selected WACC | 10.1% | |
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 MHPC.L:
cost_of_equity (19.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.00%) * adjusted_beta (2.25) + 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.