AMPY WACC - Weighted Average Cost of Capital

The WACC of Amplify Energy Corp (AMPY) is 9.5%.

The Cost of Equity of Amplify Energy Corp (AMPY) is 10.15%.

The Cost of Debt of Amplify Energy Corp (AMPY) is 9.20%.

	Range	Selected
Cost of equity	7.90% - 12.40%	10.15%
Tax rate	0.10% - 6.40%	3.25%
Cost of debt	6.00% - 12.40%	9.20%
WACC	7.1% - 12.0%	9.5%

WACC

AMPY WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.87	1.34

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	12.40%

Tax rate	0.10%	6.40%
Debt/Equity ratio	0.82	0.82
Cost of debt	6.00%	12.40%

After-tax WACC	7.1%	12.0%


Selected WACC	9.5%

AMPY'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 AMPY:

cost_of_equity (10.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.87) + 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.