The WACC of APA Corp (US) (APA) is 5.3%.
| Range | Selected | |
| Cost of equity | 3.00% - 8.70% | 5.85% |
| Tax rate | 28.20% - 29.50% | 28.85% |
| Cost of debt | 4.50% - 5.50% | 5.00% |
| WACC | 3.0% - 7.6% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.19 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.00% | 8.70% |
| Tax rate | 28.20% | 29.50% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 4.50% | 5.50% |
| After-tax WACC | 3.0% | 7.6% |
| Selected WACC | 5.3% | |
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 (5.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.19) + 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.