Telephone and Data Sys - WACC Analysis

Telephone and Data Sys (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Telephone and Data Sys's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telephone and Data Sys'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 Telephone and Data Sys uses a significant proportion of equity capital.