RTI Intl Metals - WACC Analysis

RTI Intl Metals (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for RTI Intl Metals's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of RTI Intl Metals'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 RTI Intl Metals uses a significant proportion of equity capital.