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