Cogdell Spencer - WACC Analysis

Cogdell Spencer (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Cogdell Spencer's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Cogdell Spencer'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 Cogdell Spencer uses a significant proportion of equity capital.