5101.T WACC - Weighted Average Cost of Capital

The WACC of Yokohama Rubber Co Ltd (5101.T) is 7.0%.

The Cost of Equity of Yokohama Rubber Co Ltd (5101.T) is 9.50%.

The Cost of Debt of Yokohama Rubber Co Ltd (5101.T) is 4.25%.

	Range	Selected
Cost of equity	8.00% - 11.00%	9.50%
Tax rate	32.40% - 34.10%	33.25%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.0% - 8.0%	7.0%

WACC

5101.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.09	1.21

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.00%

Tax rate	32.40%	34.10%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.00%	4.50%

After-tax WACC	6.0%	8.0%


Selected WACC	7.0%

5101.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 5101.T:

cost_of_equity (9.50%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.09) + 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.