The WACC of Comany Inc (7945.T) is 5.6%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.30% | 6.20% |
| Tax rate | 40.50% - 50.00% | 45.25% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.6% - 6.5% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.7 | 0.79 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.10% | 7.30% |
| Tax rate | 40.50% | 50.00% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.6% | 6.5% |
| Selected WACC | 5.6% | |
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 7945.T:
cost_of_equity (6.20%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.7) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.