MZA WACC - Weighted Average Cost of Capital
The WACC of Blackrock Muniyield Arizona Fund Inc (MZA) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.9% - 9.3% | 7.6% |
| Tax rate | 27.0% - 27.0% | 27% |
| Cost of debt | 4.0% - 5.5% | 4.75% |
| WACC | 4.8% - 7.3% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.63 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 9.3% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.6 | 0.6 |
| Cost of debt | 4.0% | 5.5% |
| After-tax WACC | 4.8% | 7.3% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MZA | Blackrock Muniyield Arizona Fund Inc | 0.6 | 0.24 | 0.17 |
| BRPA | Big Rock Partners Acquisition Corp | 0.04 | 0.12 | 0.12 |
| EVY | Eaton Vance New York Municipal Income Trust | 0.53 | 0.15 | 0.11 |
| JMM | Nuveen Multi-Market Income Fund Inc | 0.43 | 3.55 | 2.7 |
| LNK.CN | Link Global Technologies Inc | 0.61 | 0.96 | 0.66 |
| MFD | Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund | 0.38 | 3.55 | 2.77 |
| NC.CN | Netcents Technology Inc | 0 | 3.55 | 3.54 |
| RA.UN.TO | Middlefield Global Real Asset Fund | 1 | 0.51 | 0.3 |
| VCF | Delaware Investments Colorado Municipal Income Fund Inc | 0 | 0.31 | 0.31 |
| VST.CN | Victory Square Technologies Inc | 0.25 | 1.02 | 0.87 |
| Low | High | |
| Unlevered beta | 0.31 | 0.75 |
| Relevered beta | 0.45 | 0.99 |
| Adjusted relevered beta | 0.63 | 0.99 |
MZA'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 MZA:
cost_of_equity (7.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.63) + 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.