Bill Barrett Corp - WACC Analysis

Bill Barrett Corp (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Bill Barrett Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Bill Barrett Corp'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 Bill Barrett Corp uses a significant proportion of equity capital.