Bway Holding - WACC Analysis

Bway Holding (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Bway Holding's Analysis

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

WACC Analysis Information

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

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