Mako Surgical - WACC Analysis

Mako Surgical (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Mako Surgical's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Mako Surgical'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 Mako Surgical uses a significant proportion of equity capital.