Arch Coal (Weighted Average Cost of Capital (WACC) Analysis)
 Improve your investment analysis with by seeing the Arch Coal's Discounted Cash Flow analysis, Arch Coal's Warren Buffet analysis, and Arch Coal's Comparable Multiple analysis.  Helpful Information for Arch Coal's AnalysisWhat is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Arch Coal'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 Arch Coal. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Arch Coal before they make value investing decisions. This WACC analysis is used in Arch Coal's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Arch Coal's company valuation. |
WACC Analysis Information1. The WACC (discount rate) calculation for Arch Coal uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Arch Coal over the long term. If there are any short-term differences between the industry WACC and Arch Coal's WACC (discount rate), then Arch Coal is more likely to revert to the industry WACC (discount rate) over the long term. 2. The WACC calculation uses the higher of Arch Coal'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 Arch Coal uses a significant proportion of equity capital. |