PBIP
Prudential Bancorp Inc
Price:  
15.13 
USD
Volume:  
40,567
United States | Thrifts & Mortgage Finance

PBIP WACC - Weighted Average Cost of Capital

The WACC of Prudential Bancorp Inc (PBIP) is 6.4%.

The Cost of Equity of Prudential Bancorp Inc (PBIP) is 8.65%.
The Cost of Debt of Prudential Bancorp Inc (PBIP) is 5%.

RangeSelected
Cost of equity7.5% - 9.8%8.65%
Tax rate16.6% - 18.2%17.4%
Cost of debt5.0% - 5.0%5%
WACC5.8% - 6.9%6.4%
WACC

PBIP WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium4.2%5.2%
Adjusted beta1.011.07
Additional risk adjustments0.0%0.5%
Cost of equity7.5%9.8%
Tax rate16.6%18.2%
Debt/Equity ratio
11
Cost of debt5.0%5.0%
After-tax WACC5.8%6.9%
Selected WACC6.4%

PBIP'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 PBIP:

cost_of_equity (8.65%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.01) + 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.