Taleo Corp - WACC Analysis

Taleo Corp (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Taleo Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Taleo Corp'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 Taleo Corp uses a significant proportion of equity capital.