The WACC of Mexco Energy Corp (MXC) is 6.2%.
Range | Selected | |
Cost of equity | 5.6% - 10.7% | 8.15% |
Tax rate | 2.0% - 8.1% | 5.05% |
Cost of debt | 4.5% - 4.5% | 4.5% |
WACC | 5.0% - 7.4% | 6.2% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.38 | 1.03 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.6% | 10.7% |
Tax rate | 2.0% | 8.1% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 4.5% | 4.5% |
After-tax WACC | 5.0% | 7.4% |
Selected WACC | 6.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
MXC | Mexco Energy Corp | 0.93 | -0.08 | -0.04 |
CEI | Camber Energy Inc | 2.64 | 0.7 | 0.2 |
DKL.V | Decklar Resources Inc | 2.88 | 1.72 | 0.45 |
KDKN | Kodiak Energy Inc | 43530.38 | 0 | 0 |
MAH.V | Marksmen Energy Inc | 1.24 | -1.38 | -0.63 |
NRIS | Norris Industries Inc | 0.53 | 1.82 | 1.2 |
PFC.V | PetroFrontier Corp | 2.26 | 0.06 | 0.02 |
PRE.V | Paleo Resources Inc | 0.58 | 1.05 | 0.67 |
PUL.V | Pulse Oil Corp | 0.01 | 1.76 | 1.74 |
REOS | ReoStar Energy Corp | 30.53 | -1.29 | -0.04 |
SPI.V | Canadian Spirit Resources Inc | 0 | 1.15 | 1.15 |
Low | High | |
Unlevered beta | 0.02 | 0.45 |
Relevered beta | 0.07 | 1.04 |
Adjusted relevered beta | 0.38 | 1.03 |
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 (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.38) + 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.