Rayonier REIT - WACC Analysis

Rayonier REIT (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Rayonier REIT's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Rayonier REIT'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 Rayonier REIT uses a significant proportion of equity capital.