AP WACC - Weighted Average Cost of Capital

The WACC of Ampco-Pittsburgh Corp (AP) is 8.0%.

The Cost of Equity of Ampco-Pittsburgh Corp (AP) is 9.65%.

The Cost of Debt of Ampco-Pittsburgh Corp (AP) is 10.30%.

	Range	Selected
Cost of equity	7.90% - 11.40%	9.65%
Tax rate	19.40% - 38.50%	28.95%
Cost of debt	8.20% - 12.40%	10.30%
WACC	7.1% - 9.0%	8.0%

WACC

AP 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	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	11.40%

Tax rate	19.40%	38.50%
Debt/Equity ratio	1.74	1.74
Cost of debt	8.20%	12.40%

After-tax WACC	7.1%	9.0%


Selected WACC	8.0%

AP'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 AP:

cost_of_equity (9.65%) = 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.