MRD.TO WACC - Weighted Average Cost of Capital

The WACC of Melcor Developments Ltd (MRD.TO) is 5.6%.

The Cost of Equity of Melcor Developments Ltd (MRD.TO) is 8.65%.

The Cost of Debt of Melcor Developments Ltd (MRD.TO) is 4.45%.

	Range	Selected
Cost of equity	6.90% - 10.40%	8.65%
Tax rate	19.10% - 23.80%	21.45%
Cost of debt	4.40% - 4.50%	4.45%
WACC	4.9% - 6.3%	5.6%

WACC

MRD.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.73	1.03

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.40%

Tax rate	19.10%	23.80%
Debt/Equity ratio	1.45	1.45
Cost of debt	4.40%	4.50%

After-tax WACC	4.9%	6.3%


Selected WACC	5.6%

MRD.TO'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 MRD.TO:

cost_of_equity (8.65%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.73) + 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.