8601.T WACC - Weighted Average Cost of Capital

The WACC of Daiwa Securities Group Inc (8601.T) is 4.2%.

The Cost of Equity of Daiwa Securities Group Inc (8601.T) is 15.45%.

The Cost of Debt of Daiwa Securities Group Inc (8601.T) is 4.25%.

	Range	Selected
Cost of equity	13.20% - 17.70%	15.45%
Tax rate	24.40% - 25.40%	24.90%
Cost of debt	4.00% - 4.50%	4.25%
WACC	3.8% - 4.5%	4.2%

WACC

8601.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.93	2.14

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.20%	17.70%

Tax rate	24.40%	25.40%
Debt/Equity ratio	11.47	11.47
Cost of debt	4.00%	4.50%

After-tax WACC	3.8%	4.5%


Selected WACC	4.2%

8601.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 8601.T:

cost_of_equity (15.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.93) + 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.