The Bank of Kentucky - WACC Analysis

The Bank of Kentucky (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for The Bank of Kentucky's Analysis

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

WACC Analysis Information

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

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