Orix Corp Ads - WACC Analysis

Orix Corp Ads (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Orix Corp Ads's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Orix Corp Ads'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 Orix Corp Ads uses a significant proportion of equity capital.