Alliant Techsystems - WACC Analysis

Alliant Techsystems (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Alliant Techsystems's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Alliant Techsystems'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 Alliant Techsystems uses a significant proportion of equity capital.