Mine Safety Appliances - WACC Analysis

Mine Safety Appliances (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Mine Safety Appliances's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Mine Safety Appliances'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 Mine Safety Appliances uses a significant proportion of equity capital.