Republic Airways - WACC Analysis

Republic Airways (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Republic Airways's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Republic Airways'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 Republic Airways uses a significant proportion of equity capital.