The WACC of Alpha Systems Inc (4719.T) is 7.1%.
| Range | Selected | |
| Cost of equity | 9.60% - 12.10% | 10.85% |
| Tax rate | 31.80% - 32.10% | 31.95% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.5% - 7.8% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.35 | 1.37 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 12.10% |
| Tax rate | 31.80% | 32.10% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.5% | 7.8% |
| Selected WACC | 7.1% | |
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 4719.T:
cost_of_equity (10.85%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.35) + 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.