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