The WACC of Jimoto Holdings Inc (7161.T) is 4.7%.
| Range | Selected | |
| Cost of equity | 10.60% - 17.10% | 13.85% |
| Tax rate | 22.30% - 29.30% | 25.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.5% - 4.8% | 4.7% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.5 | 2.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.60% | 17.10% |
| Tax rate | 22.30% | 29.30% |
| Debt/Equity ratio | 9.66 | 9.66 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.5% | 4.8% |
| Selected WACC | 4.7% | |
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 7161.T:
cost_of_equity (13.85%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.5) + 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.