Copano Energy - WACC Analysis

Copano Energy (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Copano Energy's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Copano 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 Copano Energy uses a significant proportion of equity capital.