CRA Intl - WACC Analysis

CRA Intl (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for CRA Intl's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of CRA Intl'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 CRA Intl uses a significant proportion of equity capital.