Credit Acceptance (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the Credit Acceptance's Discounted Cash Flow analysis, Credit Acceptance's Warren Buffet analysis, and Credit Acceptance's Comparable Multiple analysis.
Helpful Information for Credit Acceptance's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Credit Acceptance'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 Credit Acceptance. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Credit Acceptance before they make value investing decisions. This WACC analysis is used in Credit Acceptance's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Credit Acceptance's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Credit Acceptance uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Credit Acceptance over the long term. If there are any short-term differences between the industry WACC and Credit Acceptance's WACC (discount rate), then Credit Acceptance is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Credit Acceptance'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 Credit Acceptance uses a significant proportion of equity capital.