Elbit Imaging (Weighted Average Cost of Capital (WACC) Analysis)
Helpful Information for Elbit Imaging's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Elbit Imaging'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 Elbit Imaging. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Elbit Imaging before they make value investing decisions. This WACC analysis is used in Elbit Imaging's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Elbit Imaging's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Elbit Imaging uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Elbit Imaging over the long term. If there are any short-term differences between the industry WACC and Elbit Imaging's WACC (discount rate), then Elbit Imaging is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Elbit Imaging'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 Elbit Imaging uses a significant proportion of equity capital.