Telecom Argentina - WACC Analysis

Telecom Argentina (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Telecom Argentina's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telecom 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 Telecom Argentina uses a significant proportion of equity capital.