6414.T WACC - Weighted Average Cost of Capital

The WACC of Kawasaki Thermal Engineering Co Ltd (6414.T) is 5.1%.

The Cost of Equity of Kawasaki Thermal Engineering Co Ltd (6414.T) is 7.20%.

The Cost of Debt of Kawasaki Thermal Engineering Co Ltd (6414.T) is 4.25%.

	Range	Selected
Cost of equity	5.90% - 8.50%	7.20%
Tax rate	26.30% - 28.70%	27.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.4% - 5.9%	5.1%

WACC

6414.T WACC calculation

Category	Low	High

Long-term bond rate	0.8%	1.2%
Equity market risk premium	5.4%	6.4%
Adjusted beta	0.94	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.50%

Tax rate	26.30%	28.70%
Debt/Equity ratio	1	1
Cost of debt	4.00%	4.50%

After-tax WACC	4.4%	5.9%


Selected WACC	5.1%

6414.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 6414.T:

cost_of_equity (7.20%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.94) + 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.