Epoch Holding - WACC Analysis

Epoch Holding (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Epoch Holding's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Epoch Holding'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 Epoch Holding uses a significant proportion of equity capital.