The WACC of Transaction Co Ltd (7818.T) is 5.7%.
Range | Selected | |
Cost of equity | 4.8% - 6.7% | 5.75% |
Tax rate | 32.3% - 33.3% | 32.8% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 4.7% - 6.7% | 5.7% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.55 | 0.61 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 4.8% | 6.7% |
Tax rate | 32.3% | 33.3% |
Debt/Equity ratio | 0.01 | 0.01 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 4.7% | 6.7% |
Selected WACC | 5.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
7818.T | Transaction Co Ltd | 0.01 | -0.08 | -0.08 |
3895.T | Havix Corp | 0.51 | 0.41 | 0.31 |
4465.T | Niitaka Co Ltd | 0.2 | 0.33 | 0.29 |
4912.T | Lion Corp | 0.07 | 0.34 | 0.32 |
4951.T | ST Corp | 0.02 | 0.34 | 0.33 |
4985.T | Earth Corp | 0.05 | 0.51 | 0.49 |
7956.T | Pigeon Corp | 0.01 | 0.57 | 0.57 |
8113.T | Unicharm Corp | 0.01 | 0.36 | 0.36 |
9919.TW | KNH Enterprise Co Ltd | 0.98 | 1.08 | 0.65 |
EVEREADY.NS | Eveready Industries India Ltd | 0.13 | 0.96 | 0.89 |
Low | High | |
Unlevered beta | 0.33 | 0.41 |
Relevered beta | 0.33 | 0.42 |
Adjusted relevered beta | 0.55 | 0.61 |
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 7818.T:
cost_of_equity (5.75%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.55) + 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.