Astea International - WACC Analysis

Astea International (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Astea International's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Astea International'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 Astea International uses a significant proportion of equity capital.