4188.T WACC - Weighted Average Cost of Capital

The WACC of Mitsubishi Chemical Holdings Corp (4188.T) is 6.0%.

The Cost of Equity of Mitsubishi Chemical Holdings Corp (4188.T) is 10.55%.

The Cost of Debt of Mitsubishi Chemical Holdings Corp (4188.T) is 4.25%.

	Range	Selected
Cost of equity	9.10% - 12.00%	10.55%
Tax rate	27.10% - 28.70%	27.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.4% - 6.7%	6.0%

WACC

4188.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.26	1.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	12.00%

Tax rate	27.10%	28.70%
Debt/Equity ratio	1.54	1.54
Cost of debt	4.00%	4.50%

After-tax WACC	5.4%	6.7%


Selected WACC	6.0%

4188.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 4188.T:

cost_of_equity (10.55%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.26) + 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.