IntegraMed America - WACC Analysis

IntegraMed America (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for IntegraMed America's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of IntegraMed America'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 IntegraMed America uses a significant proportion of equity capital.