Harmony Gold Mining - WACC Analysis

Harmony Gold Mining (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Harmony Gold Mining's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Harmony Gold Mining'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 Harmony Gold Mining uses a significant proportion of equity capital.