Intercontinental Exch - WACC Analysis

Intercontinental Exch (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Intercontinental Exch's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Intercontinental Exch'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 Intercontinental Exch uses a significant proportion of equity capital.