Eastman Kodak - WACC Analysis

Eastman Kodak (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Eastman Kodak's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Eastman Kodak'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 Eastman Kodak uses a significant proportion of equity capital.