MRO.L WACC - Weighted Average Cost of Capital

The WACC of Melrose Industries PLC (MRO.L) is 9.8%.

The Cost of Equity of Melrose Industries PLC (MRO.L) is 11.55%.

The Cost of Debt of Melrose Industries PLC (MRO.L) is 6.60%.

	Range	Selected
Cost of equity	9.40% - 13.70%	11.55%
Tax rate	29.00% - 39.60%	34.30%
Cost of debt	6.20% - 7.00%	6.60%
WACC	8.2% - 11.4%	9.8%

WACC

MRO.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.9	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.40%	13.70%

Tax rate	29.00%	39.60%
Debt/Equity ratio	0.31	0.31
Cost of debt	6.20%	7.00%

After-tax WACC	8.2%	11.4%


Selected WACC	9.8%

MRO.L'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 MRO.L:

cost_of_equity (11.55%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.9) + 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.