Integrated Device Tech - WACC Analysis

Integrated Device Tech (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Integrated Device Tech's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Integrated Device Tech'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 Integrated Device Tech uses a significant proportion of equity capital.