Precision Castparts (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the Precision Castparts's Discounted Cash Flow analysis, Precision Castparts's Warren Buffet analysis, and Precision Castparts's Comparable Multiple analysis.
Helpful Information for Precision Castparts's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Precision Castparts'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 Precision Castparts. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Precision Castparts before they make value investing decisions. This WACC analysis is used in Precision Castparts's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Precision Castparts's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Precision Castparts uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Precision Castparts over the long term. If there are any short-term differences between the industry WACC and Precision Castparts's WACC (discount rate), then Precision Castparts is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Precision Castparts'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 Precision Castparts uses a significant proportion of equity capital.