MRE.TO WACC - Weighted Average Cost of Capital

The WACC of Martinrea International Inc (MRE.TO) is 6.4%.

The Cost of Equity of Martinrea International Inc (MRE.TO) is 11.60%.

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

	Range	Selected
Cost of equity	10.00% - 13.20%	11.60%
Tax rate	23.90% - 45.80%	34.85%
Cost of debt	5.40% - 5.60%	5.50%
WACC	6.2% - 6.7%	6.4%

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	1.35	1.48

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	13.20%

Tax rate	23.90%	45.80%
Debt/Equity ratio	1.8	1.8
Cost of debt	5.40%	5.60%

After-tax WACC	6.2%	6.7%


Selected WACC	6.4%

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 (11.60%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.35) + 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.