Acadia Realty Trust - WACC Analysis

Acadia Realty Trust (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Acadia Realty Trust's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Acadia Realty Trust'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 Acadia Realty Trust uses a significant proportion of equity capital.