First Citizens Banc - WACC Analysis

First Citizens Banc (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for First Citizens Banc's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of First Citizens Banc'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 First Citizens Banc uses a significant proportion of equity capital.