The WACC of Hokkoku Bank Ltd (8363.T) is 3.7%.
| Range | Selected | |
| Cost of equity | 6.00% - 15.50% | 10.75% |
| Tax rate | 33.20% - 35.10% | 34.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 3.5% - 3.9% | 3.7% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.97 | 2.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 15.50% |
| Tax rate | 33.20% | 35.10% |
| Debt/Equity ratio | 18.19 | 18.19 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 3.5% | 3.9% |
| Selected WACC | 3.7% | |
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 8363.T:
cost_of_equity (10.75%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.97) + 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.