The WACC of USD Partners LP (USDP) is 13.6%.
| Range | Selected | |
| Cost of equity | 3.80% - 745,616.40% | 372,810.10% |
| Tax rate | 2.40% - 3.10% | 2.75% |
| Cost of debt | 4.00% - 23.90% | 13.95% |
| WACC | 3.9% - 23.3% | 13.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -72979.58 | 73197.42 |
| Additional risk adjustments | 335706.0% | 335706.5% |
| Cost of equity | 3.80% | 745,616.40% |
| Tax rate | 2.40% | 3.10% |
| Debt/Equity ratio | 5.38913237e+06 | 5.38913237e+06 |
| Cost of debt | 4.00% | 23.90% |
| After-tax WACC | 3.9% | 23.3% |
| Selected WACC | 13.6% | |
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 USDP:
cost_of_equity (372,810.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-72979.58) + risk_adjustments (335,706.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.