Aluminum Corp of China - WACC Analysis

Aluminum Corp of China (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Aluminum Corp of China's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Aluminum Corp of China'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 Aluminum Corp of China uses a significant proportion of equity capital.