7878.T WACC - Weighted Average Cost of Capital

The WACC of Kohsai Co Ltd (7878.T) is 4.5%.

The Cost of Equity of Kohsai Co Ltd (7878.T) is 5.90%.

The Cost of Debt of Kohsai Co Ltd (7878.T) is 4.25%.

	Range	Selected
Cost of equity	4.50% - 7.30%	5.90%
Tax rate	37.50% - 39.50%	38.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	3.7% - 5.4%	4.5%

WACC

7878.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.5	0.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.50%	7.30%

Tax rate	37.50%	39.50%
Debt/Equity ratio	0.69	0.69
Cost of debt	4.00%	4.50%

After-tax WACC	3.7%	5.4%


Selected WACC	4.5%

7878.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 7878.T:

cost_of_equity (5.90%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.5) + 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.