2914.T WACC - Weighted Average Cost of Capital
The WACC of Japan Tobacco Inc (2914.T) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.9% - 9.0% | 7.45% |
| Tax rate | 23.9% - 25.4% | 24.65% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.5% - 8.1% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.74 | 0.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.9% | 9.0% |
| Tax rate | 23.9% | 25.4% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.5% | 8.1% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 2914.T | Japan Tobacco Inc | 0.19 | 0.56 | 0.49 |
| 033780.KS | KT&G Corp | 0.1 | 0.18 | 0.16 |
| 603429.SS | Anhui Genuine New Materials Co Ltd | 0.02 | 1.43 | 1.41 |
| 6969.HK | Smoore International Holdings Ltd | 0.02 | 1.04 | 1.03 |
| BAT.KL | British American Tobacco (Malaysia) Bhd | 0.33 | 0.54 | 0.43 |
| GGRM.JK | Gudang Garam Tbk PT | 0.47 | 0.7 | 0.52 |
| GODFRYPHLP.NS | Godfrey Phillips India Ltd | 0.01 | 1.3 | 1.3 |
| HMSP.JK | Hanjaya Mandala Sampoerna Tbk PT | 0.01 | 0.72 | 0.72 |
| ITC.NS | ITC Ltd | 0 | 0.55 | 0.55 |
| RMBA.JK | Bentoel International Investama Tbk PT | 0 | 0.87 | 0.87 |
| Low | High | |
| Unlevered beta | 0.54 | 0.78 |
| Relevered beta | 0.61 | 0.9 |
| Adjusted relevered beta | 0.74 | 0.93 |
2914.T'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 2914.T:
cost_of_equity (7.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.74) + 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.