BTU
Peabody Energy Corp
Price:  
14.16 
USD
Volume:  
6,417,535.00
United States | Oil, Gas & Consumable Fuels
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BTU WACC - Weighted Average Cost of Capital

The WACC of Peabody Energy Corp (BTU) is 9.7%.

The Cost of Equity of Peabody Energy Corp (BTU) is 10.80%.
The Cost of Debt of Peabody Energy Corp (BTU) is 5.00%.

Range Selected
Cost of equity 9.30% - 12.30% 10.80%
Tax rate 4.90% - 12.10% 8.50%
Cost of debt 5.00% - 5.00% 5.00%
WACC 8.5% - 10.8% 9.7%
WACC

BTU WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.18 1.33
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.30% 12.30%
Tax rate 4.90% 12.10%
Debt/Equity ratio 0.22 0.22
Cost of debt 5.00% 5.00%
After-tax WACC 8.5% 10.8%
Selected WACC 9.7%

BTU'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 BTU:

cost_of_equity (10.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.18) + 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.