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