Maxim Integrated Prod - WACC Analysis

Maxim Integrated Prod (Weighted Average Cost of Capital (WACC) Analysis)

placeholder_large_analysis.png

Banner%20-%20The%20perfect%20tool%20for%20investors%281%29.gif

Helpful Information for Maxim Integrated Prod's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Maxim Integrated Prod'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 Maxim Integrated Prod uses a significant proportion of equity capital.