BlackRock Kelso - WACC Analysis

BlackRock Kelso (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for BlackRock Kelso's Analysis

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

WACC Analysis Information

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

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