Telekomunikasi Indonesia - WACC Analysis

Telekomunikasi Indonesia (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Telekomunikasi Indonesia's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telekomunikasi Indonesia'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 Telekomunikasi Indonesia uses a significant proportion of equity capital.