BMBN WACC - Weighted Average Cost of Capital
The WACC of Benchmark Bankshares Inc (BMBN) is 5.0%.
| Range | Selected | |
| Cost of equity | 5.5% - 7.4% | 6.45% |
| Tax rate | 29.2% - 30.1% | 29.65% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.5% - 5.4% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.54 | 0.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 7.4% |
| Tax rate | 29.2% | 30.1% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.5% | 5.4% |
| Selected WACC | 5.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BMBN | Benchmark Bankshares Inc | 0.83 | 0.06 | 0.04 |
| AMBK | American Bank Inc | 0.35 | 0.07 | 0.06 |
| CCFN | CCFNB Bancorp Inc | 1.3 | 0.23 | 0.12 |
| CLDB | Cortland Bancorp | 0.05 | 0.65 | 0.62 |
| DIMC | Dimeco Inc | 0.38 | 0.2 | 0.16 |
| DMKBA | Denmark Bancshares Inc | 0.2 | -0.43 | -0.38 |
| FBTT | First Bankers Trustshares Inc | 0.93 | 0 | 0 |
| JUVF | Juniata Valley Financial Corp | 0.24 | 0.23 | 0.2 |
| SOMC | Southern Michigan Bancorp Inc | 0.75 | 0.34 | 0.22 |
| UBCP | United Bancorp Inc | 0.68 | -0.18 | -0.12 |
| VABK | Virginia National Bankshares Corp | 0.12 | 0.62 | 0.57 |
| Low | High | |
| Unlevered beta | 0.06 | 0.16 |
| Relevered beta | 0.31 | 0.43 |
| Adjusted relevered beta | 0.54 | 0.62 |
BMBN'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 BMBN:
cost_of_equity (6.45%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.54) + 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.