The WACC of ASKA Pharmaceutical Co Ltd (4514.T) is 5.3%.
| Range | Selected | |
| Cost of equity | 4.70% - 7.20% | 5.95% |
| Tax rate | 23.30% - 25.60% | 24.45% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.3% - 6.3% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.72 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.70% | 7.20% |
| Tax rate | 23.30% | 25.60% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.3% | 6.3% |
| Selected WACC | 5.3% | |
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 4514.T:
cost_of_equity (5.95%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.72) + 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.