GTx Inc - WACC Analysis

GTx Inc (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for GTx Inc's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of GTx Inc'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 GTx Inc uses a significant proportion of equity capital.