Univest of Pennsylvania - WACC Analysis

Univest of Pennsylvania (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Univest of Pennsylvania's Analysis

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

WACC Analysis Information

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

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