Calgon Carbon - WACC Analysis

Calgon Carbon (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Calgon Carbon's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Calgon Carbon'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 Calgon Carbon uses a significant proportion of equity capital.