TCF Financial - WACC Analysis

TCF Financial (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for TCF Financial's Analysis

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

WACC Analysis Information

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

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