3864.T WACC - Weighted Average Cost of Capital

The WACC of Mitsubishi Paper Mills Ltd (3864.T) is 3.6%.

The Cost of Equity of Mitsubishi Paper Mills Ltd (3864.T) is 6.05%.

The Cost of Debt of Mitsubishi Paper Mills Ltd (3864.T) is 4.25%.

	Range	Selected
Cost of equity	3.80% - 8.30%	6.05%
Tax rate	35.40% - 41.30%	38.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	2.9% - 4.3%	3.6%

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	0.39	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	3.80%	8.30%

Tax rate	35.40%	41.30%
Debt/Equity ratio	2.52	2.52
Cost of debt	4.00%	4.50%

After-tax WACC	2.9%	4.3%


Selected WACC	3.6%

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 (6.05%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.39) + 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.