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