Hertz Global - WACC Analysis

Hertz Global (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Hertz Global's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Hertz Global'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 Hertz Global uses a significant proportion of equity capital.