Village Super Market - WACC Analysis

Village Super Market (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Village Super Market's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Village Super Market'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 Village Super Market uses a significant proportion of equity capital.