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