Intl Bancshares - WACC Analysis

Intl Bancshares (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Intl Bancshares's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Intl Bancshares'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 Intl Bancshares uses a significant proportion of equity capital.