CPF
Central Pacific Financial Corp
Price:  
26.70 
USD
Volume:  
83,657.00
United States | Banks
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CPF WACC - Weighted Average Cost of Capital

The WACC of Central Pacific Financial Corp (CPF) is 8.1%.

The Cost of Equity of Central Pacific Financial Corp (CPF) is 8.75%.
The Cost of Debt of Central Pacific Financial Corp (CPF) is 5.00%.

Range Selected
Cost of equity 7.60% - 9.90% 8.75%
Tax rate 23.90% - 24.20% 24.05%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.2% - 9.1% 8.1%
WACC

CPF WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.82 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 9.90%
Tax rate 23.90% 24.20%
Debt/Equity ratio 0.15 0.15
Cost of debt 5.00% 5.00%
After-tax WACC 7.2% 9.1%
Selected WACC 8.1%

CPF'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 CPF:

cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.82) + 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.