The WACC of M Line Holdings Inc (MLHC) is 11.9%.
| Range | Selected | |
| Cost of equity | 5.50% - 606.20% | 305.85% |
| Tax rate | 0.30% - 0.60% | 0.45% |
| Cost of debt | 7.00% - 16.70% | 11.85% |
| WACC | 7.0% - 16.8% | 11.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -13.02 | 96.4 |
| Additional risk adjustments | 61.5% | 62.0% |
| Cost of equity | 5.50% | 606.20% |
| Tax rate | 0.30% | 0.60% |
| Debt/Equity ratio | 3103.85 | 3103.85 |
| Cost of debt | 7.00% | 16.70% |
| After-tax WACC | 7.0% | 16.8% |
| Selected WACC | 11.9% | |
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 MLHC:
cost_of_equity (305.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-13.02) + risk_adjustments (61.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.