MDMP WACC - Weighted Average Cost of Capital
The WACC of Mdm Permian Inc (MDMP) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.9% - 8.6% | 7.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 8.0% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.45 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 8.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 8.0% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MDMP | Mdm Permian Inc | 0.15 | 0.81 | 0.73 |
| ALV.V | Alvopetro Energy Ltd | 0.05 | 0.29 | 0.28 |
| APHE | Alpha Energy Inc | 0.02 | -0.48 | -0.47 |
| DENR | Discovery Energy Corp | 0.39 | 0.34 | 0.26 |
| NRIS | Norris Industries Inc | 0.53 | 1.79 | 1.29 |
| POE.V | Pan Orient Energy Corp | 0 | 1.05 | 1.05 |
| POG.V | Perisson Petroleum Corp | 0.24 | -0.62 | -0.53 |
| SPI.V | Canadian Spirit Resources Inc | 0 | 1.13 | 1.13 |
| UVSE | Universal Energy Corp | 31.54 | 0 | 0 |
| XOP.CN | Canadian Overseas Petroleum Ltd | 9.64 | -1.36 | -0.17 |
| Low | High | |
| Unlevered beta | 0.16 | 0.46 |
| Relevered beta | 0.18 | 0.51 |
| Adjusted relevered beta | 0.45 | 0.67 |
MDMP'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 MDMP:
cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.45) + 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.