Corp Office Properties - WACC Analysis

Corp Office Properties (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Corp Office Properties's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Corp Office Properties'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 Corp Office Properties uses a significant proportion of equity capital.