Grupo Aeroportuario del Centro Norte - WACC Analysis

Grupo Aeroportuario del Centro Norte (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Grupo Aeroportuario del Centro Norte's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Grupo Aeroportuario del Centro Norte'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 Grupo Aeroportuario del Centro Norte uses a significant proportion of equity capital.