The WACC of Intrance Co Ltd (3237.T) is 5.4%.
| Range | Selected | |
| Cost of equity | 4.60% - 6.30% | 5.45% |
| Tax rate | 0.80% - 1.70% | 1.25% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.5% - 6.3% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.35 | 0.41 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 4.60% | 6.30% |
| Tax rate | 0.80% | 1.70% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.5% | 6.3% |
| Selected WACC | 5.4% | |
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 3237.T:
cost_of_equity (5.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.35) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.