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