CBKM WACC - Weighted Average Cost of Capital
The WACC of Consumers Bancorp Inc (CBKM) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.2% | 6.4% |
| Tax rate | 17.2% - 17.3% | 17.25% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 6.2% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.38 | 0.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.2% |
| Tax rate | 17.2% | 17.3% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 6.2% |
| Selected WACC | 5.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CBKM | Consumers Bancorp Inc | 0.48 | 0.08 | 0.06 |
| AMBK | American Bank Inc | 0.35 | 0.07 | 0.06 |
| BOTJ | Bank of the James | 0.35 | 0.19 | 0.15 |
| CLDB | Cortland Bancorp | 0.05 | 0.65 | 0.62 |
| FSRL | First Reliance Bancshares Inc | 0.47 | 0.07 | 0.05 |
| FXNC | First National Corp | 0.16 | 0.69 | 0.61 |
| PTBS | Potomac Bancshares Inc | 0.24 | 0.57 | 0.48 |
| UBCP | United Bancorp Inc | 0.69 | -0.16 | -0.1 |
| UWHR | Uwharrie Capital Corp | 0.46 | 0.01 | 0.01 |
| VBFC | Village Bank and Trust Financial Corp | 0.49 | 0.02 | 0.01 |
| Low | High | |
| Unlevered beta | 0.05 | 0.09 |
| Relevered beta | 0.07 | 0.13 |
| Adjusted relevered beta | 0.38 | 0.42 |
CBKM'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 CBKM:
cost_of_equity (6.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.38) + 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.