DCT Industrial Trust - WACC Analysis

DCT Industrial Trust (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for DCT Industrial Trust's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of DCT Industrial Trust'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 DCT Industrial Trust uses a significant proportion of equity capital.