BCTF
Bancorp 34 Inc
Price:  
12.25 
USD
Volume:  
3,250
United States | Thrifts & Mortgage Finance

BCTF WACC - Weighted Average Cost of Capital

The WACC of Bancorp 34 Inc (BCTF) is 6.4%.

The Cost of Equity of Bancorp 34 Inc (BCTF) is 7.25%.
The Cost of Debt of Bancorp 34 Inc (BCTF) is 5%.

RangeSelected
Cost of equity6.0% - 8.5%7.25%
Tax rate17.8% - 23.3%20.55%
Cost of debt5.0% - 5.0%5%
WACC5.5% - 7.3%6.4%
WACC

BCTF WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.460.65
Additional risk adjustments0.0%0.5%
Cost of equity6.0%8.5%
Tax rate17.8%23.3%
Debt/Equity ratio
0.330.33
Cost of debt5.0%5.0%
After-tax WACC5.5%7.3%
Selected WACC6.4%

BCTF'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 BCTF:

cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + 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.