RightNow Technologies - WACC Analysis

RightNow Technologies (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for RightNow Technologies's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of RightNow Technologies'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 RightNow Technologies uses a significant proportion of equity capital.