Comp En De Mn Cemig - WACC Analysis

Comp En De Mn Cemig (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Comp En De Mn Cemig's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Comp En De Mn Cemig'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 Comp En De Mn Cemig uses a significant proportion of equity capital.