Duke Realty - WACC Analysis

Duke Realty (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Duke Realty's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Duke Realty'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 Duke Realty uses a significant proportion of equity capital.