7122.T WACC - Weighted Average Cost of Capital

The WACC of Kinki Sharyo Co Ltd (7122.T) is 8.3%.

The Cost of Equity of Kinki Sharyo Co Ltd (7122.T) is 10.50%.

The Cost of Debt of Kinki Sharyo Co Ltd (7122.T) is 4.25%.

	Range	Selected
Cost of equity	8.20% - 12.80%	10.50%
Tax rate	10.70% - 20.20%	15.45%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.7% - 9.9%	8.3%

WACC

7122.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.11	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	12.80%

Tax rate	10.70%	20.20%
Debt/Equity ratio	0.47	0.47
Cost of debt	4.00%	4.50%

After-tax WACC	6.7%	9.9%


Selected WACC	8.3%

7122.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 7122.T:

cost_of_equity (10.50%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.11) + 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.