LaSalle Hotel Properties - WACC Analysis

LaSalle Hotel Properties (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for LaSalle Hotel Properties's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of LaSalle Hotel Properties'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 LaSalle Hotel Properties uses a significant proportion of equity capital.