OPTT
Ocean Power Technologies Inc
Price:  
0.43 
USD
Volume:  
2,206,440.00
United States | Electrical Equipment
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OPTT WACC - Weighted Average Cost of Capital

The WACC of Ocean Power Technologies Inc (OPTT) is 6.5%.

The Cost of Equity of Ocean Power Technologies Inc (OPTT) is 8.30%.
The Cost of Debt of Ocean Power Technologies Inc (OPTT) is 5.00%.

Range Selected
Cost of equity 6.30% - 10.30% 8.30%
Tax rate 3.00% - 5.80% 4.40%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.6% - 7.5% 6.5%
WACC

OPTT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 10.30%
Tax rate 3.00% 5.80%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 5.6% 7.5%
Selected WACC 6.5%

OPTT'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 OPTT:

cost_of_equity (8.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.