Molson Coors Brewing - WACC Analysis

Molson Coors Brewing (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Molson Coors Brewing's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Molson Coors Brewing'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 Molson Coors Brewing uses a significant proportion of equity capital.