ROYL WACC - Weighted Average Cost of Capital
The WACC of Royale Energy Funds Inc (ROYL) is 6.7%.
| Range | Selected | |
| Cost of equity | 5.7% - 10.7% | 8.2% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.4% - 7.9% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.4 | 1.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 10.7% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.4% | 7.9% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ROYL | Royale Energy Funds Inc | 1.19 | -0.8 | -0.43 |
| DBRM | Daybreak Oil and Gas Inc | 36.67 | 1.8 | 0.06 |
| DXI.H.V | DXI Capital Corp | 0.37 | -1.96 | -1.54 |
| MAH.V | Marksmen Energy Inc | 1.21 | -1.38 | -0.73 |
| MCS.V | McChip Resources Inc | 0.41 | 0.71 | 0.55 |
| PCQ.V | Petrolympic Ltd | 0 | -1.04 | -1.04 |
| PRE.V | Paleo Resources Inc | 0.58 | 1.05 | 0.74 |
| ROK.V | ROK Resources Inc | 0.42 | 1.95 | 1.5 |
| SNV.V | Sonoro Energy Ltd | 0.04 | 0.78 | 0.76 |
| TRSI | Trophy Resources Inc | 32.23 | 1.29 | 0.05 |
| Low | High | |
| Unlevered beta | -0.14 | 0.26 |
| Relevered beta | 0.1 | 1.06 |
| Adjusted relevered beta | 0.4 | 1.04 |
ROYL'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 ROYL:
cost_of_equity (8.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.