Liberty Property - WACC Analysis

Liberty Property (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Liberty Property's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Liberty Property'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 Liberty Property uses a significant proportion of equity capital.