AMB Property - WACC Analysis

AMB Property (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for AMB Property's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of AMB Property'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 AMB Property uses a significant proportion of equity capital.