9720.T WACC - Weighted Average Cost of Capital
The WACC of Hotel Newgrand Co Ltd (9720.T) is 5.4%.
| Range | Selected | |
| Cost of equity | 4.7% - 7.4% | 6.05% |
| Tax rate | 4.5% - 25.0% | 14.75% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.5% - 6.4% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.54 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.7% | 7.4% |
| Tax rate | 4.5% | 25.0% |
| Debt/Equity ratio | 0.36 | 0.36 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.5% | 6.4% |
| Selected WACC | 5.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 9720.T | Hotel Newgrand Co Ltd | 0.36 | 0.12 | 0.09 |
| 3010.T | Kachikaihatsu Co Ltd | 0.66 | 0.99 | 0.61 |
| 3121.T | MBK Co Ltd | 1.17 | 0.27 | 0.13 |
| 3772.T | Wealth Management Inc | 1.58 | 0.65 | 0.26 |
| 6547.T | Greens Co Ltd | 0.47 | 1.07 | 0.75 |
| 6565.T | ABhotel Co Ltd | 0.53 | 0.9 | 0.6 |
| 9695.T | Kamogawa Grand Hotel Ltd | 2.28 | 0.59 | 0.19 |
| 9704.T | Agora Hospitality Group Co Ltd | 0.53 | 0.46 | 0.31 |
| 9722.T | Fujita Kanko Inc | 0.29 | 0.95 | 0.75 |
| 9723.T | Kyoto Hotel Ltd | 1.6 | 0.23 | 0.09 |
| Low | High | |
| Unlevered beta | 0.23 | 0.43 |
| Relevered beta | 0.31 | 0.57 |
| Adjusted relevered beta | 0.54 | 0.71 |
9720.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 9720.T:
cost_of_equity (6.05%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.54) + 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.