Jones Lang LaSalle - WACC Analysis

Jones Lang LaSalle (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Jones Lang LaSalle's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Jones Lang LaSalle'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 Jones Lang LaSalle uses a significant proportion of equity capital.