The WACC of Kokusai Chart Corp (3956.T) is 7.3%.
| Range | Selected | |
| Cost of equity | 5.70% - 9.10% | 7.40% |
| Tax rate | 13.40% - 18.60% | 16.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.6% - 9.0% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.9 | 1.15 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 9.10% |
| Tax rate | 13.40% | 18.60% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.6% | 9.0% |
| Selected WACC | 7.3% | |
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 3956.T:
cost_of_equity (7.40%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.9) + 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.