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 |
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.