The WACC of AOI TYO Holdings Inc (3975.T) is 6.6%.
| Range | Selected | |
| Cost of equity | 7.50% - 10.70% | 9.10% |
| Tax rate | 34.90% - 39.40% | 37.15% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.6% - 7.7% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 1.24 | 1.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.50% | 10.70% |
| Tax rate | 34.90% | 39.40% |
| Debt/Equity ratio | 0.63 | 0.63 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.6% | 7.7% |
| Selected WACC | 6.6% | |
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 3975.T:
cost_of_equity (9.10%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (1.24) + 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.