Mobile Mini - WACC Analysis

Mobile Mini (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Mobile Mini's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Mobile Mini'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 Mobile Mini uses a significant proportion of equity capital.