Yadkin Valley - WACC Analysis

Yadkin Valley (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Yadkin Valley's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Yadkin Valley'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 Yadkin Valley uses a significant proportion of equity capital.