Trimble Navigation - WACC Analysis

Trimble Navigation (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Trimble Navigation's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Trimble Navigation'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 Trimble Navigation uses a significant proportion of equity capital.