MPWR
Monolithic Power Systems Inc
Price:  
662.18 
USD
Volume:  
508,484.00
United States | Semiconductors & Semiconductor Equipment
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MPWR WACC - Weighted Average Cost of Capital

The WACC of Monolithic Power Systems Inc (MPWR) is 9.0%.

The Cost of Equity of Monolithic Power Systems Inc (MPWR) is 13.80%.
The Cost of Debt of Monolithic Power Systems Inc (MPWR) is 5.00%.

Range Selected
Cost of equity 11.30% - 16.30% 13.80%
Tax rate 13.70% - 16.00% 14.85%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.8% - 10.2% 9.0%
WACC

MPWR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.62 2.04
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.30% 16.30%
Tax rate 13.70% 16.00%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 7.8% 10.2%
Selected WACC 9.0%

MPWR'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 MPWR:

cost_of_equity (13.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.62) + 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.