OFC WACC - Weighted Average Cost of Capital

The WACC of Corporate Office Properties Trust (OFC) is 8.2%.

The Cost of Equity of Corporate Office Properties Trust (OFC) is 9.25%.

The Cost of Debt of Corporate Office Properties Trust (OFC) is 5.45%.

	Range	Selected
Cost of equity	7.80% - 10.70%	9.25%
Tax rate	0.30% - 0.30%	0.30%
Cost of debt	4.00% - 6.90%	5.45%
WACC	6.7% - 9.7%	8.2%

WACC

OFC WACC calculation

Category	Low	High

Long-term bond rate	4.2%	4.7%
Equity market risk premium	5.0%	6.0%
Adjusted beta	0.73	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	10.70%

Tax rate	0.30%	0.30%
Debt/Equity ratio	0.39	0.39
Cost of debt	4.00%	6.90%

After-tax WACC	6.7%	9.7%


Selected WACC	8.2%

OFC'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 OFC:

cost_of_equity (9.25%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.73) + 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.