SB WACC - Weighted Average Cost of Capital

The WACC of Safe Bulkers Inc (SB) is 8.1%.

The Cost of Equity of Safe Bulkers Inc (SB) is 10.50%.

The Cost of Debt of Safe Bulkers Inc (SB) is 7.30%.

	Range	Selected
Cost of equity	9.10% - 11.90%	10.50%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	5.50% - 9.10%	7.30%
WACC	6.8% - 9.5%	8.1%

WACC

SB WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.13	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.90%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.86	0.86
Cost of debt	5.50%	9.10%

After-tax WACC	6.8%	9.5%


Selected WACC	8.1%

SB'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 SB:

cost_of_equity (10.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.13) + 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.