RTI Biologics - WACC Analysis

RTI Biologics (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for RTI Biologics's Analysis

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

WACC Analysis Information

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

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