NYSE Euronext - WACC Analysis

NYSE Euronext (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for NYSE Euronext's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of NYSE Euronext'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 NYSE Euronext uses a significant proportion of equity capital.