The WACC of Bank of Okinawa Ltd (8397.T) is 3.7%.
| Range | Selected | |
| Cost of equity | 3.20% - 5.20% | 4.20% |
| Tax rate | 30.30% - 30.90% | 30.60% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 3.4% - 4.0% | 3.7% |
| Category | Low | High |
| Long-term bond rate | 0.8% | 1.2% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.44 | 0.54 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.20% | 5.20% |
| Tax rate | 30.30% | 30.90% |
| Debt/Equity ratio | 2.21 | 2.21 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 3.4% | 4.0% |
| 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 8397.T:
cost_of_equity (4.20%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (0.44) + 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.