The WACC of Kitanihon Spinning Co Ltd (3409.T) is 5.9%.
| Range | Selected | |
| Cost of equity | 4.90% - 7.10% | 6.00% |
| Tax rate | 3.30% - 10.00% | 6.65% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.8% - 7.0% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.42 | 0.52 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 4.90% | 7.10% |
| Tax rate | 3.30% | 10.00% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.8% | 7.0% |
| Selected WACC | 5.9% | |
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 3409.T:
cost_of_equity (6.00%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.42) + 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.