MRE.TO WACC - Weighted Average Cost of Capital

The WACC of Martinrea International Inc (MRE.TO) is 5.3%.

The Cost of Equity of Martinrea International Inc (MRE.TO) is 8.75%.

The Cost of Debt of Martinrea International Inc (MRE.TO) is 5.50%.

	Range	Selected
Cost of equity	6.30% - 11.20%	8.75%
Tax rate	23.90% - 45.80%	34.85%
Cost of debt	5.40% - 5.60%	5.50%
WACC	4.8% - 5.8%	5.3%

WACC

MRE.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.61	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	11.20%

Tax rate	23.90%	45.80%
Debt/Equity ratio	2	2
Cost of debt	5.40%	5.60%

After-tax WACC	4.8%	5.8%


Selected WACC	5.3%

MRE.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 MRE.TO:

cost_of_equity (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.61) + 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.