BDCO WACC - Weighted Average Cost of Capital

The WACC of Blue Dolphin Energy Co (BDCO) is 11.6%.

The Cost of Equity of Blue Dolphin Energy Co (BDCO) is 5.80%.

The Cost of Debt of Blue Dolphin Energy Co (BDCO) is 19.30%.

	Range	Selected
Cost of equity	4.90% - 6.70%	5.80%
Tax rate	1.30% - 7.00%	4.15%
Cost of debt	14.70% - 23.90%	19.30%
WACC	9.3% - 13.8%	11.6%

WACC

BDCO WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.22	0.33

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	6.70%

Tax rate	1.30%	7.00%
Debt/Equity ratio	0.85	0.85
Cost of debt	14.70%	23.90%

After-tax WACC	9.3%	13.8%


Selected WACC	11.6%

BDCO'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 BDCO:

cost_of_equity (5.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.22) + 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.