TLW.L
Tullow Oil PLC
Price:  
13.58 
GBP
Volume:  
2,991,346.00
United Kingdom | Oil, Gas & Consumable Fuels
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TLW.L WACC - Weighted Average Cost of Capital

The WACC of Tullow Oil PLC (TLW.L) is 8.8%.

The Cost of Equity of Tullow Oil PLC (TLW.L) is 44.30%.
The Cost of Debt of Tullow Oil PLC (TLW.L) is 6.15%.

Range Selected
Cost of equity 36.30% - 52.30% 44.30%
Tax rate 19.00% - 19.00% 19.00%
Cost of debt 5.70% - 6.60% 6.15%
WACC 7.7% - 9.9% 8.8%
WACC

TLW.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 5.4 6.77
Additional risk adjustments 0.0% 0.5%
Cost of equity 36.30% 52.30%
Tax rate 19.00% 19.00%
Debt/Equity ratio 9.27 9.27
Cost of debt 5.70% 6.60%
After-tax WACC 7.7% 9.9%
Selected WACC 8.8%

TLW.L'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 TLW.L:

cost_of_equity (44.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (5.4) + 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.