MRE.TO WACC - Weighted Average Cost of Capital

The WACC of Martinrea International Inc (MRE.TO) is 5.7%.

The Cost of Equity of Martinrea International Inc (MRE.TO) is 7.90%.

The Cost of Debt of Martinrea International Inc (MRE.TO) is 5.40%.

	Range	Selected
Cost of equity	6.00% - 9.80%	7.90%
Tax rate	23.00% - 23.80%	23.40%
Cost of debt	4.60% - 6.20%	5.40%
WACC	4.6% - 6.8%	5.7%

WACC

MRE.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.56	0.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	9.80%

Tax rate	23.00%	23.80%
Debt/Equity ratio	1.45	1.45
Cost of debt	4.60%	6.20%

After-tax WACC	4.6%	6.8%


Selected WACC	5.7%

MRE.TO'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 MRE.TO:

cost_of_equity (7.90%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.56) + 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.