8802.T WACC - Weighted Average Cost of Capital

The WACC of Mitsubishi Estate Co Ltd (8802.T) is 5.2%.

The Cost of Equity of Mitsubishi Estate Co Ltd (8802.T) is 7.30%.

The Cost of Debt of Mitsubishi Estate Co Ltd (8802.T) is 4.25%.

	Range	Selected
Cost of equity	6.00% - 8.60%	7.30%
Tax rate	27.50% - 27.90%	27.70%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.5% - 5.9%	5.2%

WACC

8802.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.75	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	8.60%

Tax rate	27.50%	27.90%
Debt/Equity ratio	0.98	0.98
Cost of debt	4.00%	4.50%

After-tax WACC	4.5%	5.9%


Selected WACC	5.2%

8802.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 8802.T:

cost_of_equity (7.30%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.75) + 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.