American States Water (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the American States Water's Discounted Cash Flow analysis, American States Water's Warren Buffet analysis, and American States Water's Comparable Multiple analysis.
Helpful Information for American States Water's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine American States Water'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 American States Water. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in American States Water before they make value investing decisions. This WACC analysis is used in American States Water's discounted cash flow (DCF) valuation and see how the WACC calculation affect's American States Water's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for American States Water uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for American States Water over the long term. If there are any short-term differences between the industry WACC and American States Water's WACC (discount rate), then American States Water is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of American States Water'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 American States Water uses a significant proportion of equity capital.