Molecular Insight Pharma - WACC Analysis

Molecular Insight Pharma (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Molecular Insight Pharma's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Molecular Insight Pharma'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 Molecular Insight Pharma uses a significant proportion of equity capital.