Williams Pipeline PT - WACC Analysis

Williams Pipeline PT (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Williams Pipeline PT's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Williams Pipeline PT'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 Williams Pipeline PT uses a significant proportion of equity capital.