DVN WACC - Weighted Average Cost of Capital

The WACC of Devon Energy Corp (DVN) is 8.1%.

The Cost of Equity of Devon Energy Corp (DVN) is 9.80%.

The Cost of Debt of Devon Energy Corp (DVN) is 5.50%.

	Range	Selected
Cost of equity	8.40% - 11.20%	9.80%
Tax rate	18.00% - 19.20%	18.60%
Cost of debt	4.60% - 6.40%	5.50%
WACC	6.9% - 9.3%	8.1%

WACC

DVN WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.98	1.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.40%	11.20%

Tax rate	18.00%	19.20%
Debt/Equity ratio	0.45	0.45
Cost of debt	4.60%	6.40%

After-tax WACC	6.9%	9.3%


Selected WACC	8.1%

DVN'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 DVN:

cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.