Asset Acceptance - WACC Analysis

Asset Acceptance (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Asset Acceptance's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Asset Acceptance's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Asset Acceptance. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Asset Acceptance before they make value investing decisions. This WACC analysis is used in Asset Acceptance's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Asset Acceptance's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Asset Acceptance uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Asset Acceptance over the long term. If there are any short-term differences between the industry WACC and Asset Acceptance's WACC (discount rate), then Asset Acceptance is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Asset Acceptance's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Asset Acceptance uses a significant proportion of equity capital.