Question 1

What is First American Financial Corporation's WACC?

Accepted Answer

First American Financial Corporation (FAF) has a Weighted Average Cost of Capital (WACC) of 7.79%. This is calculated using a Cost of Equity of 7.74% (via CAPM with a beta of 0.83) and a pre-tax Cost of Debt of 10.16%, with an equity weight of 81.35% in the capital structure.

Question 2

Is First American Financial Corporation's WACC high or low?

Accepted Answer

First American Financial Corporation's WACC of 7.79% is below the typical range of 8-12% for most companies, indicating relatively low cost of capital and lower risk. WACC is used as the discount rate in DCF valuations — a lower WACC results in higher present values of future cash flows.

Question 3

How is First American Financial Corporation's WACC calculated?

Accepted Answer

First American Financial Corporation's WACC is calculated using the formula: WACC = (E/V × Re) + (D/V × Rd × (1-T)). The Cost of Equity (Re) of 7.74% is derived from the CAPM model using a beta of 0.83. The pre-tax Cost of Debt (Rd) is 10.16%. The capital structure is 81.35% equity and 18.65% debt.

First American Financial Corporation (FAF) — WACC 分析

WACC 构成

解读

First American Financial Corporation（FAF）WACC：7.79%

WACC计算器

First American Financial Corporation（FAF） WACC 解读

FAF 公司分析

FAF DCF 估值

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