NTT DoCoMo - WACC Analysis

NTT DoCoMo (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for NTT DoCoMo's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of NTT DoCoMo'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 NTT DoCoMo uses a significant proportion of equity capital.