Monro Muffler Brake - WACC Analysis

Monro Muffler Brake (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Monro Muffler Brake's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Monro Muffler Brake'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 Monro Muffler Brake uses a significant proportion of equity capital.