Micrus Endovascular - WACC Analysis

Micrus Endovascular (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Micrus Endovascular's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Micrus Endovascular'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 Micrus Endovascular uses a significant proportion of equity capital.