NIC Inc - WACC Analysis

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



Helpful Information for NIC Inc's Analysis

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

WACC Analysis Information

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

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