Online Resources Corp - WACC Analysis

Online Resources Corp (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Online Resources Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Online Resources Corp'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 Online Resources Corp uses a significant proportion of equity capital.