MRGO WACC - Weighted Average Cost of Capital
The WACC of Margo Caribe Inc (MRGO) is 7.6%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.5% | 8.4% |
| Tax rate | 0.8% - 1.3% | 1.05% |
| Cost of debt | 4.0% - 5.4% | 4.7% |
| WACC | 6.5% - 8.6% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.97 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.5% |
| Tax rate | 0.8% | 1.3% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 4.0% | 5.4% |
| After-tax WACC | 6.5% | 8.6% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MRGO | Margo Caribe Inc | 0.29 | -1.58 | -1.23 |
| CUB.V | CubicFarm Systems Corp | 3.46 | -0.27 | -0.06 |
| IGP.V | Imperial Ginseng Products Ltd | 0.9 | 1.32 | 0.7 |
| INP.V | Input Capital Corp | 0.18 | 1.02 | 0.87 |
| POND.V | Pond Technologies Holdings Inc | 3.52 | -3.47 | -0.78 |
| SANW | S&W Seed Co | 10.3 | 0.95 | 0.09 |
| SEED | Origin Agritech Ltd | 0.11 | 0.39 | 0.35 |
| STEV | Stevia Corp | 0.44 | -0.41 | -0.28 |
| Low | High | |
| Unlevered beta | -0.11 | 0.14 |
| Relevered beta | 0.96 | 1.04 |
| Adjusted relevered beta | 0.97 | 1.03 |
MRGO'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 MRGO:
cost_of_equity (8.40%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.97) + 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.