Prgx Global - WACC Analysis

Prgx Global (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Prgx Global's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Prgx Global'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 Prgx Global uses a significant proportion of equity capital.