Virginia Commerce - WACC Analysis

Virginia Commerce (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Virginia Commerce's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Virginia Commerce'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 Virginia Commerce uses a significant proportion of equity capital.