Amcol International - WACC Analysis

Amcol International (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Amcol International's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Amcol International'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 Amcol International uses a significant proportion of equity capital.