4450.T WACC - Weighted Average Cost of Capital
The WACC of Power Solutions Ltd (4450.T) is 6.7%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.8% | 7.4% |
| Tax rate | 32.8% - 34.3% | 33.55% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.5% - 7.9% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.76 | 0.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.8% |
| Tax rate | 32.8% | 34.3% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.5% | 7.9% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 4450.T | Power Solutions Ltd | 0.17 | 0.4 | 0.36 |
| 3042.T | SecuAvail Inc | 0 | 0.71 | 0.71 |
| 3625.T | Techfirm Holdings Inc | 0.18 | 1 | 0.9 |
| 3753.T | Flight Holdings Inc | 0.25 | 1.25 | 1.07 |
| 3814.T | Alphax Food System Co Ltd | 0.89 | 0.39 | 0.24 |
| 4016.T | MIT Holdings Co Ltd | 0.62 | 0.73 | 0.51 |
| 4316.T | Bemap Inc | 0.05 | 0.26 | 0.25 |
| 4386.T | SIG Co Ltd | 0.37 | 1.04 | 0.83 |
| 4814.T | Nextware Ltd | 0 | 0.61 | 0.61 |
| 7527.T | Systemsoft Corp | 0.04 | 1.11 | 1.09 |
| Low | High | |
| Unlevered beta | 0.57 | 0.76 |
| Relevered beta | 0.64 | 0.84 |
| Adjusted relevered beta | 0.76 | 0.89 |
4450.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 4450.T:
cost_of_equity (7.40%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.76) + 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.