MPAA
Motorcar Parts of America Inc
Price:  
12.39 
USD
Volume:  
102,029.00
United States | Auto Components
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MPAA WACC - Weighted Average Cost of Capital

The WACC of Motorcar Parts of America Inc (MPAA) is 11.0%.

The Cost of Equity of Motorcar Parts of America Inc (MPAA) is 10.35%.
The Cost of Debt of Motorcar Parts of America Inc (MPAA) is 19.25%.

Range Selected
Cost of equity 9.10% - 11.60% 10.35%
Tax rate 33.50% - 39.00% 36.25%
Cost of debt 15.60% - 22.90% 19.25%
WACC 9.5% - 12.4% 11.0%
WACC

MPAA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.14 1.2
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.10% 11.60%
Tax rate 33.50% 39.00%
Debt/Equity ratio 0.53 0.53
Cost of debt 15.60% 22.90%
After-tax WACC 9.5% 12.4%
Selected WACC 11.0%

MPAA'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 MPAA:

cost_of_equity (10.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + 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.