GSPE WACC - Weighted Average Cost of Capital
The WACC of GulfSlope Energy Inc (GSPE) is 7.1%.
| Range | Selected | |
| Cost of equity | 7.4% - 11.3% | 9.35% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.9% - 8.3% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.76 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 11.3% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.66 | 0.66 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.9% | 8.3% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GSPE | GulfSlope Energy Inc | 0.66 | -87.75 | -59.28 |
| AVN.V | Avanti Energy Inc | 0.02 | 1.91 | 1.88 |
| CEI | Camber Energy Inc | 2.64 | 0.7 | 0.24 |
| DENR | Discovery Energy Corp | 0.39 | 0.34 | 0.26 |
| DKL.V | Decklar Resources Inc | 2.88 | 1.72 | 0.55 |
| MAH.V | Marksmen Energy Inc | 1.21 | -1.38 | -0.73 |
| NRIS | Norris Industries Inc | 0.63 | 1.8 | 1.23 |
| PFC.V | PetroFrontier Corp | 2.26 | -0.11 | -0.04 |
| PRE.V | Paleo Resources Inc | 0.58 | 1.05 | 0.74 |
| SPI.V | Canadian Spirit Resources Inc | 0 | 1 | 0.99 |
| Low | High | |
| Unlevered beta | 0.25 | 0.63 |
| Relevered beta | 0.64 | 1.22 |
| Adjusted relevered beta | 0.76 | 1.15 |
GSPE'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 GSPE:
cost_of_equity (9.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.