The WACC of Mac House Co Ltd (7603.T) is 7.1%.
| Range | Selected | |
| Cost of equity | 5.50% - 8.20% | 6.85% |
| Tax rate | 10.20% - 12.00% | 11.10% |
| Cost of debt | 7.00% - 10.30% | 8.65% |
| WACC | 5.7% - 8.4% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.42 | 0.61 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.50% | 8.20% |
| Tax rate | 10.20% | 12.00% |
| Debt/Equity ratio | 0.35 | 0.35 |
| Cost of debt | 7.00% | 10.30% |
| After-tax WACC | 5.7% | 8.4% |
| Selected WACC | 7.1% | |
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 7603.T:
cost_of_equity (6.85%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.42) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.