Telefonica De Argentina - WACC Analysis

Telefonica De Argentina (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Telefonica De Argentina's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telefonica De Argentina'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 Telefonica De Argentina uses a significant proportion of equity capital.