Loral Space and Comm - WACC Analysis

Loral Space and Comm (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Loral Space and Comm's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Loral Space and Comm'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 Loral Space and Comm uses a significant proportion of equity capital.