CB Richard Ellis - WACC Analysis

CB Richard Ellis (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for CB Richard Ellis's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of CB Richard Ellis'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 CB Richard Ellis uses a significant proportion of equity capital.