Kansas City Life Insurance - WACC Analysis

Kansas City Life Insurance (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Kansas City Life Insurance's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Kansas City Life Insurance'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 Kansas City Life Insurance uses a significant proportion of equity capital.