The WACC of Mitsui Soko Holdings Co Ltd (9302.T) is 5.5%.
Range | Selected | |
Cost of equity | 5.40% - 7.50% | 6.45% |
Tax rate | 31.20% - 32.60% | 31.90% |
Cost of debt | 4.00% - 4.50% | 4.25% |
WACC | 4.7% - 6.3% | 5.5% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.66 | 0.72 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.40% | 7.50% |
Tax rate | 31.20% | 32.60% |
Debt/Equity ratio | 0.38 | 0.38 |
Cost of debt | 4.00% | 4.50% |
After-tax WACC | 4.7% | 6.3% |
Selected WACC | 5.5% | |
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 9302.T:
cost_of_equity (6.45%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.66) + 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.