The WACC of GCA Corp (2174.T) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.90% - 8.80% | 7.35% |
| Tax rate | 29.40% - 35.10% | 32.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.7% - 8.4% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.94 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.90% | 8.80% |
| Tax rate | 29.40% | 35.10% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.7% | 8.4% |
| Selected WACC | 7.0% | |
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 2174.T:
cost_of_equity (7.35%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.94) + 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.