MXC WACC - Weighted Average Cost of Capital
The WACC of Mexco Energy Corp (MXC) is 6.5%.
| Range | Selected | |
| Cost of equity | 7.3% - 12.0% | 9.65% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 5.3% - 7.6% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 1.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 12.0% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 5.3% | 7.6% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| MXC | Mexco Energy Corp | 1.01 | 0.2 | 0.11 |
| CEI | Camber Energy Inc | 2.64 | 0.7 | 0.24 |
| DKL.V | Decklar Resources Inc | 2.88 | 1.72 | 0.55 |
| KDKN | Kodiak Energy Inc | 43530.38 | 0 | 0 |
| NRIS | Norris Industries Inc | 0.65 | 1.99 | 1.36 |
| PFC.V | PetroFrontier Corp | 4.52 | 0.21 | 0.05 |
| PRE.V | Paleo Resources Inc | 0.58 | 1.05 | 0.74 |
| PUL.V | Pulse Oil Corp | 0.02 | 1.73 | 1.71 |
| REOS | ReoStar Energy Corp | 22.79 | -1.47 | -0.08 |
| ROK.V | ROK Resources Inc | 0.37 | 2.04 | 1.61 |
| SPI.V | Canadian Spirit Resources Inc | 0 | 0.96 | 0.95 |
| Low | High | |
| Unlevered beta | 0.24 | 0.74 |
| Relevered beta | 0.61 | 1.4 |
| Adjusted relevered beta | 0.74 | 1.27 |
MXC'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 MXC:
cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.