BCE Inc - WACC Analysis

BCE Inc (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for BCE Inc's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of BCE Inc'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 BCE Inc uses a significant proportion of equity capital.