9506.T WACC - Weighted Average Cost of Capital

The WACC of Tohoku Electric Power Co Inc (9506.T) is 4.1%.

The Cost of Equity of Tohoku Electric Power Co Inc (9506.T) is 12.35%.

The Cost of Debt of Tohoku Electric Power Co Inc (9506.T) is 4.50%.

	Range	Selected
Cost of equity	7.90% - 16.80%	12.35%
Tax rate	34.10% - 38.70%	36.40%
Cost of debt	4.00% - 5.00%	4.50%
WACC	3.3% - 4.9%	4.1%

WACC

9506.T WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.07	2.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	16.80%

Tax rate	34.10%	38.70%
Debt/Equity ratio	6.64	6.64
Cost of debt	4.00%	5.00%

After-tax WACC	3.3%	4.9%


Selected WACC	4.1%

9506.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 9506.T:

cost_of_equity (12.35%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1.07) + 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.