MPC WACC - Weighted Average Cost of Capital
The WACC of Marathon Petroleum Corp (MPC) is 7.7%.
| Range | Selected | |
| Cost of equity | 8.6% - 11.3% | 9.95% |
| Tax rate | 16.7% - 18.8% | 17.75% |
| Cost of debt | 4.3% - 5.1% | 4.7% |
| WACC | 6.7% - 8.6% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.02 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 11.3% |
| Tax rate | 16.7% | 18.8% |
| Debt/Equity ratio | 0.58 | 0.58 |
| Cost of debt | 4.3% | 5.1% |
| After-tax WACC | 6.7% | 8.6% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MPC | Marathon Petroleum Corp | 0.58 | 1.09 | 0.74 |
| CLMT | Calumet Specialty Products Partners LP | 2.2 | 1.79 | 0.64 |
| CVI | CVR Energy Inc | 0.89 | 1.43 | 0.82 |
| DK | Delek US Holdings Inc | 2.9 | 1.45 | 0.43 |
| HFC | HollyFrontier Corp | 0.53 | 1.58 | 1.1 |
| PARR | Par Pacific Holdings Inc | 1.16 | 0.66 | 0.34 |
| PBF | PBF Energy Inc | 0.65 | 1.39 | 0.91 |
| PSX | Phillips 66 | 0.44 | 1.13 | 0.83 |
| REGI | Renewable Energy Group Inc | 0.17 | 0.58 | 0.51 |
| VLO | Valero Energy Corp | 0.27 | 1.22 | 1 |
| Low | High | |
| Unlevered beta | 0.7 | 0.82 |
| Relevered beta | 1.03 | 1.22 |
| Adjusted relevered beta | 1.02 | 1.15 |
MPC'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 MPC:
cost_of_equity (9.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + 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.