REOS
ReoStar Energy Corp
Price:  
0.01 
USD
Volume:  
188,590.00
United States | Oil, Gas & Consumable Fuels
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REOS WACC - Weighted Average Cost of Capital

The WACC of ReoStar Energy Corp (REOS) is 5.2%.

The Cost of Equity of ReoStar Energy Corp (REOS) is 5.95%.
The Cost of Debt of ReoStar Energy Corp (REOS) is 7.00%.

Range Selected
Cost of equity 5.20% - 6.70% 5.95%
Tax rate 22.70% - 29.20% 25.95%
Cost of debt 7.00% - 7.00% 7.00%
WACC 5.4% - 5.0% 5.2%
WACC

REOS WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.3 0.33
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.20% 6.70%
Tax rate 22.70% 29.20%
Debt/Equity ratio 22.79 22.79
Cost of debt 7.00% 7.00%
After-tax WACC 5.4% 5.0%
Selected WACC 5.2%

REOS'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 REOS:

cost_of_equity (5.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.3) + 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.