6794.T WACC - Weighted Average Cost of Capital
The WACC of Foster Electric Co Ltd (6794.T) is 6.9%.
| Range | Selected | |
| Cost of equity | 7.3% - 10.6% | 8.95% |
| Tax rate | 23.6% - 32.3% | 27.95% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.8% - 7.9% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.96 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 10.6% |
| Tax rate | 23.6% | 32.3% |
| Debt/Equity ratio | 0.55 | 0.55 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.8% | 7.9% |
| Selected WACC | 6.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 6794.T | Foster Electric Co Ltd | 0.55 | 1.69 | 1.23 |
| 6632.T | JVCkenwood Corp | 0.26 | 0.84 | 0.71 |
| 6752.T | Panasonic Corp | 0.38 | 1.06 | 0.84 |
| 6753.T | Sharp Corp | 1.05 | 0.93 | 0.54 |
| 6758.T | Sony Corp | 0.19 | 1.34 | 1.19 |
| 6809.T | TOA Corp (Hyogo) | 0.08 | 0.73 | 0.69 |
| 6839.T | Funai Electric Co Ltd | 0.01 | 1.87 | 1.86 |
| 6952.T | Casio Computer Co Ltd | 0.21 | 0.65 | 0.56 |
| 7731.T | Nikon Corp | 0.35 | 0.84 | 0.68 |
| 7740.T | Tamron Co Ltd | 0.01 | 0.99 | 0.98 |
| Low | High | |
| Unlevered beta | 0.7 | 0.89 |
| Relevered beta | 0.94 | 1.24 |
| Adjusted relevered beta | 0.96 | 1.16 |
6794.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 6794.T:
cost_of_equity (8.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.96) + 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.