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