Brookfield Properties - WACC Analysis

Brookfield Properties (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Brookfield Properties's Analysis

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

WACC Analysis Information

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

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