Amylin Pharma - WACC Analysis

Amylin Pharma (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Amylin Pharma's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Amylin Pharma'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 Amylin Pharma uses a significant proportion of equity capital.