Silver Wheaton - WACC Analysis

Silver Wheaton (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Silver Wheaton's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Silver Wheaton'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 Silver Wheaton uses a significant proportion of equity capital.