7820.T WACC - Weighted Average Cost of Capital

The WACC of Nihon Flush Co Ltd (7820.T) is 6.3%.

The Cost of Equity of Nihon Flush Co Ltd (7820.T) is 6.60%.

The Cost of Debt of Nihon Flush Co Ltd (7820.T) is 4.25%.

	Range	Selected
Cost of equity	5.30% - 7.90%	6.60%
Tax rate	27.60% - 28.70%	28.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.1% - 7.4%	6.3%

WACC

7820.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.48	0.63

Additional risk adjustments	1.0%	1.5%
Cost of equity	5.30%	7.90%

Tax rate	27.60%	28.70%
Debt/Equity ratio	0.1	0.1
Cost of debt	4.00%	4.50%

After-tax WACC	5.1%	7.4%


Selected WACC	6.3%

7820.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 7820.T:

cost_of_equity (6.60%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.48) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.