The WACC of Japan Securities Finance Co Ltd (8511.T) is 10.0%.
| Range | Selected | |
| Cost of equity | 22.20% - 119.10% | 70.65% |
| Tax rate | 27.60% - 27.70% | 27.65% |
| Cost of debt | 4.00% - 21.40% | 12.70% |
| WACC | 3.2% - 16.9% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 3.4 | 16.37 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.20% | 119.10% |
| Tax rate | 27.60% | 27.70% |
| Debt/Equity ratio | 69.86 | 69.86 |
| Cost of debt | 4.00% | 21.40% |
| After-tax WACC | 3.2% | 16.9% |
| Selected WACC | 10.0% | |
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 8511.T:
cost_of_equity (70.65%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (3.4) + 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.