Interactive Intelligence - WACC Analysis

Interactive Intelligence (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Interactive Intelligence's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Interactive Intelligence'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 Interactive Intelligence uses a significant proportion of equity capital.