6902.T WACC - Weighted Average Cost of Capital
The WACC of Denso Corp (6902.T) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.7% | 8.4% |
| Tax rate | 21.9% - 23.7% | 22.8% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.7% - 9.0% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.94 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.7% |
| Tax rate | 21.9% | 23.7% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.7% | 9.0% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 6902.T | Denso Corp | 0.12 | 1.28 | 1.17 |
| 3116.T | Toyota Boshoku Corp | 0.42 | 0.93 | 0.7 |
| 5802.T | Sumitomo Electric Industries Ltd | 0.26 | 1.59 | 1.32 |
| 5991.T | NHK Spring Co Ltd | 0.19 | 1.06 | 0.93 |
| 6201.T | Toyota Industries Corp | 0.33 | 1.49 | 1.19 |
| 6473.T | Jtekt Corp | 0.6 | 1.23 | 0.84 |
| 7240.T | NOK Corp | 0.21 | 0.88 | 0.76 |
| 7259.T | Aisin Seiki Co Ltd | 0.49 | 1.12 | 0.81 |
| 7276.T | Koito Manufacturing Co Ltd | 0.01 | 0.8 | 0.79 |
| 7282.T | Toyoda Gosei Co Ltd | 0.28 | 1.19 | 0.98 |
| Low | High | |
| Unlevered beta | 0.83 | 0.95 |
| Relevered beta | 0.91 | 1.04 |
| Adjusted relevered beta | 0.94 | 1.03 |
6902.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 6902.T:
cost_of_equity (8.40%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * 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.