The WACC of Mallinckrodt PLC (MNKKQ) is 11.1%.
| Range | Selected | |
| Cost of equity | 115.90% - 253.40% | 184.65% |
| Tax rate | 11.80% - 22.40% | 17.10% |
| Cost of debt | 5.30% - 20.60% | 12.95% |
| WACC | 5.2% - 17.0% | 11.1% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 26.6 | 47.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 115.90% | 253.40% |
| Tax rate | 11.80% | 22.40% |
| Debt/Equity ratio | 234.03 | 234.03 |
| Cost of debt | 5.30% | 20.60% |
| After-tax WACC | 5.2% | 17.0% |
| Selected WACC | 11.1% | |
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 MNKKQ:
cost_of_equity (184.65%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (26.6) + 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.