National Financial Pt - WACC Analysis

National Financial Pt (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for National Financial Pt's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of National Financial Pt'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 National Financial Pt uses a significant proportion of equity capital.