Advanced Semiconductor - WACC Analysis

Advanced Semiconductor (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Advanced Semiconductor's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Advanced Semiconductor'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 Advanced Semiconductor uses a significant proportion of equity capital.