Questar - WACC Analysis

Questar (Weighted Average Cost of Capital (WACC) Analysis)

placeholder_large_analysis.png

Banner%20-%20The%20perfect%20tool%20for%20investors%281%29.gif

Helpful Information for Questar's Analysis

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

WACC Analysis Information

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

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