7201.T WACC - Weighted Average Cost of Capital

The WACC of Nissan Motor Co Ltd (7201.T) is 9.1%.

The Cost of Equity of Nissan Motor Co Ltd (7201.T) is 17.45%.

The Cost of Debt of Nissan Motor Co Ltd (7201.T) is 11.20%.

	Range	Selected
Cost of equity	13.20% - 21.70%	17.45%
Tax rate	26.40% - 31.50%	28.95%
Cost of debt	4.00% - 18.40%	11.20%
WACC	4.4% - 13.9%	9.1%

WACC

7201.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.92	2.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	21.70%

Tax rate	26.40%	31.50%
Debt/Equity ratio	6.11	6.11
Cost of debt	4.00%	18.40%

After-tax WACC	4.4%	13.9%


Selected WACC	9.1%

7201.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 7201.T:

cost_of_equity (17.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.92) + 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.