6857.T WACC - Weighted Average Cost of Capital

The WACC of Advantest Corp (6857.T) is 10.0%.

The Cost of Equity of Advantest Corp (6857.T) is 10.10%.

The Cost of Debt of Advantest Corp (6857.T) is 4.25%.

	Range	Selected
Cost of equity	8.60% - 11.60%	10.10%
Tax rate	22.40% - 24.30%	23.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.5% - 11.5%	10.0%

WACC

6857.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.18	1.29

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	11.60%

Tax rate	22.40%	24.30%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.00%	4.50%

After-tax WACC	8.5%	11.5%


Selected WACC	10.0%

6857.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 6857.T:

cost_of_equity (10.10%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.18) + 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.