6870.T WACC - Weighted Average Cost of Capital

The WACC of Fenwal Controls of Japan Ltd (6870.T) is 10.5%.

The Cost of Equity of Fenwal Controls of Japan Ltd (6870.T) is 10.95%.

The Cost of Debt of Fenwal Controls of Japan Ltd (6870.T) is 4.25%.

	Range	Selected
Cost of equity	9.30% - 12.60%	10.95%
Tax rate	25.30% - 29.50%	27.40%
Cost of debt	4.00% - 4.50%	4.25%
WACC	9.0% - 12.1%	10.5%

WACC

6870.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.29	1.43

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	12.60%

Tax rate	25.30%	29.50%
Debt/Equity ratio	0.05	0.05
Cost of debt	4.00%	4.50%

After-tax WACC	9.0%	12.1%


Selected WACC	10.5%

6870.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 6870.T:

cost_of_equity (10.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.29) + 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.