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