Compania Mina Buenaventura - WACC Analysis

Compania Mina Buenaventura (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Compania Mina Buenaventura's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Compania Mina Buenaventura'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 Compania Mina Buenaventura uses a significant proportion of equity capital.