Iron Mountain - WACC Analysis

Iron Mountain (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Iron Mountain's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Iron Mountain'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 Iron Mountain uses a significant proportion of equity capital.