The WACC of Subaru Corp (7270.T) is 8.2%.
Range | Selected | |
Cost of equity | 7.9% - 10.8% | 9.35% |
Tax rate | 28.2% - 29.9% | 29.05% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 7.0% - 9.4% | 8.2% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 1.07 | 1.18 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.9% | 10.8% |
Tax rate | 28.2% | 29.9% |
Debt/Equity ratio | 0.22 | 0.22 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 7.0% | 9.4% |
Selected WACC | 8.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
7270.T | Subaru Corp | 0.22 | 1.3 | 1.13 |
000550.SZ | Jiangling Motors Corp Ltd | 0.12 | 1.31 | 1.21 |
600733.SS | BAIC BluePark New Energy Technology Co Ltd | 0.48 | 1.63 | 1.21 |
7202.T | Isuzu Motors Ltd | 0.51 | 0.98 | 0.72 |
7211.T | Mitsubishi Motors Corp | 0.52 | 1.22 | 0.89 |
7222.T | Nissan Shatai Co Ltd | 0.14 | 0.68 | 0.62 |
7261.T | Mazda Motor Corp | 1.3 | 1.39 | 0.72 |
7269.T | Suzuki Motor Corp | 0.22 | 1.15 | 0.99 |
M&M.NS | Mahindra and Mahindra Ltd | 0.29 | 1.69 | 1.4 |
TATAMOTORS.NS | Tata Motors Ltd | 0.29 | 1.29 | 1.07 |
Low | High | |
Unlevered beta | 0.95 | 1.09 |
Relevered beta | 1.1 | 1.27 |
Adjusted relevered beta | 1.07 | 1.18 |
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 7270.T:
cost_of_equity (9.35%) = 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.