Alliance Bernstein Income Fund - WACC Analysis

Alliance Bernstein Income Fund (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Alliance Bernstein Income Fund's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Alliance Bernstein Income Fund'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 Alliance Bernstein Income Fund. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Alliance Bernstein Income Fund before they make value investing decisions. This WACC analysis is used in Alliance Bernstein Income Fund's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Alliance Bernstein Income Fund's company valuation.

WACC Analysis Information

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

2. The WACC calculation uses the higher of Alliance Bernstein Income Fund'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 Alliance Bernstein Income Fund uses a significant proportion of equity capital.