The WACC of Marshall Motor Holdings PLC (MMH.L) is 11.0%.
| Range | Selected | |
| Cost of equity | 7.70% - 10.60% | 9.15% |
| Tax rate | 23.00% - 25.10% | 24.05% |
| Cost of debt | 4.70% - 40.00% | 22.35% |
| WACC | 6.7% - 15.3% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.89 | 1.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 10.60% |
| Tax rate | 23.00% | 25.10% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 4.70% | 40.00% |
| After-tax WACC | 6.7% | 15.3% |
| Selected WACC | 11.0% | |
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 MMH.L:
cost_of_equity (9.15%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.89) + 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.