SPND WACC - Weighted Average Cost of Capital
The WACC of Spindletop Oil and Gas Co (SPND) is 4.8%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.2% | 6.3% |
| Tax rate | 25.8% - 40.1% | 32.95% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.5% - 5.1% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.2% |
| Tax rate | 25.8% | 40.1% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.5% | 5.1% |
| Selected WACC | 4.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SPND | Spindletop Oil and Gas Co | 0.94 | -0.67 | -0.4 |
| KDKN | Kodiak Energy Inc | 43530.38 | 0 | 0 |
| NRIS | Norris Industries Inc | 0.63 | 1.8 | 1.24 |
| NZ.V | New Zealand Energy Corp | 0.47 | 2.05 | 1.53 |
| PEI.V | Prospera Energy Inc | 0.5 | 0.19 | 0.14 |
| PFC.V | PetroFrontier Corp | 2.26 | -0.11 | -0.04 |
| REOS | ReoStar Energy Corp | 27.57 | -1.41 | -0.07 |
| RSRV | Reserve Petroleum Co | 0.05 | 0.06 | 0.06 |
| XL.V | XXL Energy Corp | 43.96 | -0.44 | -0.01 |
| Low | High | |
| Unlevered beta | -0.01 | 0.05 |
| Relevered beta | 0 | 0.13 |
| Adjusted relevered beta | 0.33 | 0.42 |
SPND'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 SPND:
cost_of_equity (6.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.