Newmont Mining - WACC Analysis

Newmont Mining (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Newmont Mining's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Newmont Mining'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 Newmont Mining uses a significant proportion of equity capital.