Dynamics Research - WACC Analysis

Dynamics Research (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Dynamics Research's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Dynamics Research'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 Dynamics Research uses a significant proportion of equity capital.