Mindray Medical Intl - WACC Analysis

Mindray Medical Intl (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Mindray Medical Intl's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Mindray Medical Intl'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 Mindray Medical Intl uses a significant proportion of equity capital.