AngloGold Ashanti - WACC Analysis

AngloGold Ashanti (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for AngloGold Ashanti's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of AngloGold Ashanti'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 AngloGold Ashanti uses a significant proportion of equity capital.