Empresa Nacional de Elec - WACC Analysis

Empresa Nacional de Elec (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Empresa Nacional de Elec's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Empresa Nacional de Elec'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 Empresa Nacional de Elec uses a significant proportion of equity capital.