Take-Two Interactive - WACC Analysis

Take-Two Interactive (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Take-Two Interactive's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Take-Two Interactive'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 Take-Two Interactive uses a significant proportion of equity capital.