7305.T WACC - Weighted Average Cost of Capital
The WACC of Araya Industrial Co Ltd (7305.T) is 6.1%.
| Range | Selected | |
| Cost of equity | 5.8% - 7.9% | 6.85% |
| Tax rate | 28.3% - 30.6% | 29.45% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.2% - 7.0% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.72 | 0.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 7.9% |
| Tax rate | 28.3% | 30.6% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.2% | 7.0% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 7305.T | Araya Industrial Co Ltd | 0.26 | 0.63 | 0.54 |
| 5445.T | Tokyo Tekko Co Ltd | 0.1 | 1.04 | 0.97 |
| 5446.T | Hokuetsu Metal Co Ltd | 0.55 | 0.25 | 0.18 |
| 5464.T | Mory Industries Inc | 0.06 | 0.98 | 0.94 |
| 5476.T | Nippon Koshuha Steel Co Ltd | 1.24 | 0.96 | 0.51 |
| 5491.T | Nippon Kinzoku Co Ltd | 4.32 | 0.91 | 0.23 |
| 5563.T | Nippon Denko Co Ltd | 0.49 | 0.82 | 0.61 |
| 5658.T | Nichia Steel Works Ltd | 0.2 | 0.54 | 0.48 |
| 5660.T | Kobelco Wire Co Ltd | 1.31 | 0.5 | 0.26 |
| 5976.T | Neturen Co Ltd | 0.19 | 0.69 | 0.61 |
| Low | High | |
| Unlevered beta | 0.5 | 0.57 |
| Relevered beta | 0.58 | 0.67 |
| Adjusted relevered beta | 0.72 | 0.78 |
7305.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 7305.T:
cost_of_equity (6.85%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.72) + 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.