MS
Morgan Stanley
Price:  
121.88 
USD
Volume:  
6,449,238.00
United States | Capital Markets
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MS WACC - Weighted Average Cost of Capital

The WACC of Morgan Stanley (MS) is 10.7%.

The Cost of Equity of Morgan Stanley (MS) is 10.35%.
The Cost of Debt of Morgan Stanley (MS) is 13.95%.

Range Selected
Cost of equity 8.20% - 12.50% 10.35%
Tax rate 22.20% - 22.70% 22.45%
Cost of debt 4.00% - 23.90% 13.95%
WACC 4.2% - 17.2% 10.7%
WACC

MS WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.94 1.36
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 12.50%
Tax rate 22.20% 22.70%
Debt/Equity ratio 3.89 3.89
Cost of debt 4.00% 23.90%
After-tax WACC 4.2% 17.2%
Selected WACC 10.7%

MS'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 MS:

cost_of_equity (10.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + 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.