MS
Morgan Stanley
Price:  
128.16 
USD
Volume:  
4,337,122.00
United States | Capital Markets
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MS WACC - Weighted Average Cost of Capital

The WACC of Morgan Stanley (MS) is 10.6%.

The Cost of Equity of Morgan Stanley (MS) is 10.00%.
The Cost of Debt of Morgan Stanley (MS) is 13.95%.

Range Selected
Cost of equity 8.10% - 11.90% 10.00%
Tax rate 22.20% - 22.70% 22.45%
Cost of debt 4.00% - 23.90% 13.95%
WACC 4.2% - 17.1% 10.6%
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 0.91 1.26
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.10% 11.90%
Tax rate 22.20% 22.70%
Debt/Equity ratio 3.71 3.71
Cost of debt 4.00% 23.90%
After-tax WACC 4.2% 17.1%
Selected WACC 10.6%

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 (10.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.91) + 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.