Telefonos de Mexico - WACC Analysis

Telefonos de Mexico (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Telefonos de Mexico's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telefonos de Mexico'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 Telefonos de Mexico uses a significant proportion of equity capital.