Telecom de Sao Paulo - WACC Analysis

Telecom de Sao Paulo (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Telecom de Sao Paulo's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Telecom de Sao Paulo'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 de Sao Paulo uses a significant proportion of equity capital.