ORC
Orchid Island Capital Inc
Price:  
7.16 
USD
Volume:  
2,932,563.00
United States | Mortgage Real Estate Investment Trusts (REITs)
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

ORC WACC - Weighted Average Cost of Capital

The WACC of Orchid Island Capital Inc (ORC) is 9.8%.

The Cost of Equity of Orchid Island Capital Inc (ORC) is 7.30%.
The Cost of Debt of Orchid Island Capital Inc (ORC) is 13.95%.

Range Selected
Cost of equity 6.00% - 8.60% 7.30%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 23.90% 13.95%
WACC 3.4% - 16.3% 9.8%
WACC

ORC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.47 0.67
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.00% 8.60%
Tax rate 26.20% 27.00%
Debt/Equity ratio 6.73 6.73
Cost of debt 4.00% 23.90%
After-tax WACC 3.4% 16.3%
Selected WACC 9.8%

ORC'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 ORC:

cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.47) + 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.