APA
APA Corp (US)
Price:  
17.01 
USD
Volume:  
7,729,189.00
United States | Oil, Gas & Consumable Fuels
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APA WACC - Weighted Average Cost of Capital

The WACC of APA Corp (US) (APA) is 7.6%.

The Cost of Equity of APA Corp (US) (APA) is 11.25%.
The Cost of Debt of APA Corp (US) (APA) is 5.20%.

Range Selected
Cost of equity 9.70% - 12.80% 11.25%
Tax rate 20.80% - 27.80% 24.30%
Cost of debt 4.80% - 5.60% 5.20%
WACC 6.8% - 8.5% 7.6%
WACC

APA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.27 1.42
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.70% 12.80%
Tax rate 20.80% 27.80%
Debt/Equity ratio 0.98 0.98
Cost of debt 4.80% 5.60%
After-tax WACC 6.8% 8.5%
Selected WACC 7.6%

APA'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 APA:

cost_of_equity (11.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.27) + 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.