NATCO Gp - WACC Analysis

NATCO Gp (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for NATCO Gp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of NATCO Gp'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 NATCO Gp uses a significant proportion of equity capital.