The WACC of MMC Corporation Bhd (MMCCORP.KL) is 7.5%.
| Range | Selected | |
| Cost of equity | 11.50% - 16.10% | 13.80% |
| Tax rate | 33.00% - 37.10% | 35.05% |
| Cost of debt | 5.00% - 8.30% | 6.65% |
| WACC | 6.1% - 8.9% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 1.23 | 1.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.50% | 16.10% |
| Tax rate | 33.00% | 37.10% |
| Debt/Equity ratio | 2 | 2 |
| Cost of debt | 5.00% | 8.30% |
| After-tax WACC | 6.1% | 8.9% |
| Selected WACC | 7.5% | |
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 MMCCORP.KL:
cost_of_equity (13.80%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (1.23) + 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.