4420.T WACC - Weighted Average Cost of Capital

The WACC of Esol Co Ltd (4420.T) is 6.9%.

The Cost of Equity of Esol Co Ltd (4420.T) is 10.50%.

The Cost of Debt of Esol Co Ltd (4420.T) is 5.00%.

	Range	Selected
Cost of equity	9.20% - 11.80%	10.50%
Tax rate	32.10% - 38.90%	35.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.3% - 7.4%	6.9%

WACC

4420.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.27	1.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	11.80%

Tax rate	32.10%	38.90%
Debt/Equity ratio	1	1
Cost of debt	5.00%	5.00%

After-tax WACC	6.3%	7.4%


Selected WACC	6.9%

4420.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 4420.T:

cost_of_equity (10.50%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.27) + 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.