The WACC of Sawai Pharmaceutical Co Ltd (4555.T) is 4.9%.
| Range | Selected | |
| Cost of equity | 4.30% - 6.10% | 5.20% |
| Tax rate | 24.50% - 27.30% | 25.90% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.0% - 5.9% | 4.9% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.65 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.30% | 6.10% |
| Tax rate | 24.50% | 27.30% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.0% | 5.9% |
| Selected WACC | 4.9% | |
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 4555.T:
cost_of_equity (5.20%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.65) + 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.