6297.T
Koken Boring Machine Co Ltd
Price:  
761.00 
JPY
Volume:  
53,600.00
Japan | Machinery
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6297.T WACC - Weighted Average Cost of Capital

The WACC of Koken Boring Machine Co Ltd (6297.T) is 5.5%.

The Cost of Equity of Koken Boring Machine Co Ltd (6297.T) is 7.45%.
The Cost of Debt of Koken Boring Machine Co Ltd (6297.T) is 4.25%.

Range Selected
Cost of equity 6.30% - 8.60% 7.45%
Tax rate 23.70% - 28.20% 25.95%
Cost of debt 4.00% - 4.50% 4.25%
WACC 4.9% - 6.2% 5.5%
WACC

6297.T WACC calculation

Category Low High
Long-term bond rate 1.4% 1.9%
Equity market risk premium 6.1% 7.1%
Adjusted beta 0.8 0.87
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.60%
Tax rate 23.70% 28.20%
Debt/Equity ratio 0.8 0.8
Cost of debt 4.00% 4.50%
After-tax WACC 4.9% 6.2%
Selected WACC 5.5%

6297.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 6297.T:

cost_of_equity (7.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.8) + 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.