Assisted Living Concepts - WACC Analysis

Assisted Living Concepts (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Assisted Living Concepts's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Assisted Living Concepts'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 Assisted Living Concepts uses a significant proportion of equity capital.