IOG.L WACC - Weighted Average Cost of Capital
The WACC of Independent Oil and Gas PLC (IOG.L) is 8.5%.
| Range | Selected | |
| Cost of equity | 52.1% - 100.6% | 76.35% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 5.2% - 8.4% | 6.8% |
| WACC | 6.2% - 10.8% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 8.05 | 13.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 52.1% | 100.6% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 22.72 | 22.72 |
| Cost of debt | 5.2% | 8.4% |
| After-tax WACC | 6.2% | 10.8% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IOG.L | Independent Oil and Gas PLC | 22.72 | 0.61 | 0.03 |
| CASP.L | Caspian Sunrise PLC | 0.08 | 0.54 | 0.51 |
| CHAR.L | Chariot Oil and Gas Ltd | 0.06 | 1.4 | 1.34 |
| GSP.MI | Gas Plus SpA | 0.46 | 0.15 | 0.11 |
| I3E.L | I3 Energy PLC | 0.23 | 0.23 | 0.19 |
| INFA.L | Infrastrata PLC | 0.93 | 1.14 | 0.65 |
| JOG.L | Jersey Oil and Gas PLC | 0 | 1.72 | 1.71 |
| LFDE.PA | La Francaise de l Energie SA | 0.16 | 0.93 | 0.82 |
| PMG.L | Parkmead Group PLC | 0.08 | 1.48 | 1.39 |
| RKH.L | Rockhopper Exploration PLC | 0 | 1.67 | 1.67 |
| Low | High | |
| Unlevered beta | 0.59 | 1.03 |
| Relevered beta | 11.52 | 19.96 |
| Adjusted relevered beta | 8.05 | 13.7 |
IOG.L'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 IOG.L:
cost_of_equity (76.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (8.05) + 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.