The WACC of MS Industrie AG (MSAG.DE) is 9.9%.
| Range | Selected | |
| Cost of equity | 7.20% - 10.10% | 8.65% |
| Tax rate | 26.30% - 31.90% | 29.10% |
| Cost of debt | 22.80% - 24.30% | 23.55% |
| WACC | 8.7% - 11.1% | 9.9% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.88 | 1.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.20% | 10.10% |
| Tax rate | 26.30% | 31.90% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 22.80% | 24.30% |
| After-tax WACC | 8.7% | 11.1% |
| Selected WACC | 9.9% | |
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 MSAG.DE:
cost_of_equity (8.65%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.88) + 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.