The WACC of GMO Financial Holdings Inc (7177.T) is 5.3%.
| Range | Selected | |
| Cost of equity | 7.90% - 16.60% | 12.25% |
| Tax rate | 36.90% - 39.50% | 38.20% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.0% - 6.5% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.07 | 1.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.90% | 16.60% |
| Tax rate | 36.90% | 39.50% |
| Debt/Equity ratio | 2.66 | 2.66 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.0% | 6.5% |
| Selected WACC | 5.3% | |
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 7177.T:
cost_of_equity (12.25%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.07) + 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.