Latinoamericano de Exportaciones - WACC Analysis

Latinoamericano de Exportaciones (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Latinoamericano de Exportaciones's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Latinoamericano de Exportaciones'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 Latinoamericano de Exportaciones uses a significant proportion of equity capital.