Urstadt Biddle Properties - WACC Analysis

Urstadt Biddle Properties (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Urstadt Biddle Properties's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Urstadt Biddle Properties'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 Urstadt Biddle Properties uses a significant proportion of equity capital.