Internet Initiative Japan - WACC Analysis

Internet Initiative Japan (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Internet Initiative Japan's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Internet Initiative Japan'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 Internet Initiative Japan uses a significant proportion of equity capital.