Yamana Gold - WACC Analysis

Yamana Gold (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Yamana Gold's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Yamana Gold'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 Yamana Gold uses a significant proportion of equity capital.