MMC
Marsh & McLennan Companies Inc
Price:  
226.57 
USD
Volume:  
1,501,302.00
United States | Insurance
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MMC WACC - Weighted Average Cost of Capital

The WACC of Marsh & McLennan Companies Inc (MMC) is 7.1%.

The Cost of Equity of Marsh & McLennan Companies Inc (MMC) is 7.75%.
The Cost of Debt of Marsh & McLennan Companies Inc (MMC) is 4.35%.

Range Selected
Cost of equity 6.70% - 8.80% 7.75%
Tax rate 24.50% - 24.70% 24.60%
Cost of debt 4.10% - 4.60% 4.35%
WACC 6.2% - 8.0% 7.1%
WACC

MMC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.63 0.71
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 8.80%
Tax rate 24.50% 24.70%
Debt/Equity ratio 0.18 0.18
Cost of debt 4.10% 4.60%
After-tax WACC 6.2% 8.0%
Selected WACC 7.1%

MMC'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 MMC:

cost_of_equity (7.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.