Chiquita Brands Intl - WACC Analysis

Chiquita Brands Intl (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Chiquita Brands Intl's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Chiquita Brands Intl'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 Chiquita Brands Intl uses a significant proportion of equity capital.