Equity Lifestyle Properties - WACC Analysis

Equity Lifestyle Properties (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Equity Lifestyle Properties's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Equity Lifestyle Properties'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 Equity Lifestyle Properties uses a significant proportion of equity capital.