The WACC of Toyo Asano Foundation Co Ltd (5271.T) is 4.3%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.10% | 9.55% |
| Tax rate | 40.40% - 42.90% | 41.65% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 3.9% - 4.8% | 4.3% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.08 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.10% |
| Tax rate | 40.40% | 42.90% |
| Debt/Equity ratio | 2.79 | 2.79 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 3.9% | 4.8% |
| Selected WACC | 4.3% | |
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 5271.T:
cost_of_equity (9.55%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.08) + 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.