8835.T WACC - Weighted Average Cost of Capital

The WACC of Taiheiyo Kouhatsu Inc (8835.T) is 4.0%.

The Cost of Equity of Taiheiyo Kouhatsu Inc (8835.T) is 7.50%.

The Cost of Debt of Taiheiyo Kouhatsu Inc (8835.T) is 4.50%.

	Range	Selected
Cost of equity	5.70% - 9.30%	7.50%
Tax rate	33.70% - 34.60%	34.15%
Cost of debt	4.00% - 5.00%	4.50%
WACC	3.4% - 4.7%	4.0%

WACC

8835.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.71	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	9.30%

Tax rate	33.70%	34.60%
Debt/Equity ratio	3.27	3.27
Cost of debt	4.00%	5.00%

After-tax WACC	3.4%	4.7%


Selected WACC	4.0%

8835.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 8835.T:

cost_of_equity (7.50%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.71) + 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.