3864.T WACC - Weighted Average Cost of Capital

The WACC of Mitsubishi Paper Mills Ltd (3864.T) is 5.6%.

The Cost of Equity of Mitsubishi Paper Mills Ltd (3864.T) is 6.40%.

The Cost of Debt of Mitsubishi Paper Mills Ltd (3864.T) is 8.60%.

	Range	Selected
Cost of equity	4.90% - 7.90%	6.40%
Tax rate	35.40% - 41.30%	38.35%
Cost of debt	4.00% - 13.20%	8.60%
WACC	3.5% - 7.8%	5.6%

WACC

3864.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.57	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	7.90%

Tax rate	35.40%	41.30%
Debt/Equity ratio	1.6	1.6
Cost of debt	4.00%	13.20%

After-tax WACC	3.5%	7.8%


Selected WACC	5.6%

3864.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 3864.T:

cost_of_equity (6.40%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.57) + 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.