Boeing - WACC Analysis

Boeing (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Boeing's Analysis

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

WACC Analysis Information

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

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