Barrick Gold - WACC Analysis

Barrick Gold (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Barrick Gold's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Barrick Gold'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 Barrick Gold uses a significant proportion of equity capital.