Compania Cervecerias Unidas - WACC Analysis

Compania Cervecerias Unidas (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Compania Cervecerias Unidas's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Compania Cervecerias Unidas'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 Compania Cervecerias Unidas uses a significant proportion of equity capital.