Tele Celular Sul Participacoes - WACC Analysis

Tele Celular Sul Participacoes (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Tele Celular Sul Participacoes's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Tele Celular Sul Participacoes'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 Tele Celular Sul Participacoes uses a significant proportion of equity capital.