RYFL WACC - Weighted Average Cost of Capital
The WACC of Royal Financial Inc (RYFL) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.9% - 8.3% | 7.1% |
| Tax rate | 1.9% - 4.8% | 3.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.4% - 6.6% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.64 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 8.3% |
| Tax rate | 1.9% | 4.8% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.4% | 6.6% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RYFL | Royal Financial Inc | 0 | 0.72 | 0.71 |
| BVFL | Bv Financial Inc | 0.21 | 0.6 | 0.5 |
| CIBN | Community Investors Bancorp Inc | 0.59 | 0.04 | 0.03 |
| EQFN | Equitable Financial Corp | 0.01 | 0.2 | 0.2 |
| HVBC | HV Bancorp Inc | 0.13 | 0.62 | 0.55 |
| KSBI | Ks Bancorp Inc | 0.81 | -0.03 | -0.02 |
| LOGN | Logansport Financial Corp | 0.59 | 0.06 | 0.04 |
| PPSF | Peoples Sidney Financial Corp | 0.05 | -0.52 | -0.5 |
| Low | High | |
| Unlevered beta | 0.03 | 0.26 |
| Relevered beta | 0.46 | 0.7 |
| Adjusted relevered beta | 0.64 | 0.8 |
RYFL'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 RYFL:
cost_of_equity (7.10%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.64) + 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.