TAL Intl - WACC Analysis

TAL Intl (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for TAL Intl's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of TAL 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 TAL Intl uses a significant proportion of equity capital.