9797.T WACC - Weighted Average Cost of Capital

The WACC of Nippon Engineering Consultants Co Ltd (9797.T) is 6.5%.

The Cost of Equity of Nippon Engineering Consultants Co Ltd (9797.T) is 10.25%.

The Cost of Debt of Nippon Engineering Consultants Co Ltd (9797.T) is 4.25%.

	Range	Selected
Cost of equity	8.10% - 12.40%	10.25%
Tax rate	35.40% - 37.50%	36.45%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.3% - 7.6%	6.5%

WACC

9797.T WACC calculation

Category	Low	High

Long-term bond rate	0.8%	1.2%
Equity market risk premium	5.4%	6.4%
Adjusted beta	1.34	1.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	12.40%

Tax rate	35.40%	37.50%
Debt/Equity ratio	1	1
Cost of debt	4.00%	4.50%

After-tax WACC	5.3%	7.6%


Selected WACC	6.5%

9797.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 9797.T:

cost_of_equity (10.25%) = risk_free_rate (1.00%) + equity_risk_premium (5.90%) * adjusted_beta (1.34) + 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.