AEPT
American Energy Partners Inc
Price:  
USD
Volume:  
6,670
United States | Utilities

AEPT WACC - Weighted Average Cost of Capital

The WACC of American Energy Partners Inc (AEPT) is 8.4%.

The Cost of Equity of American Energy Partners Inc (AEPT) is 13.1%.
The Cost of Debt of American Energy Partners Inc (AEPT) is 11.4%.

RangeSelected
Cost of equity5.1% - 21.1%13.1%
Tax rate26.2% - 27.0%26.6%
Cost of debt7.0% - 15.8%11.4%
WACC5.2% - 11.7%8.4%
WACC

AEPT WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta-3.32-0.05
Additional risk adjustments16.5%17.0%
Cost of equity5.1%21.1%
Tax rate26.2%27.0%
Debt/Equity ratio
65.8465.84
Cost of debt7.0%15.8%
After-tax WACC5.2%11.7%
Selected WACC8.4%

AEPT WACC - Detailed calculations of Beta

LowHigh
Unlevered beta-0.23-0.04
Relevered beta-5.45-0.57
Adjusted relevered beta-3.32-0.05

AEPT'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 AEPT:

cost_of_equity (13.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-3.32) + risk_adjustments (16.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.