Daimler AG - WACC Analysis

Daimler AG (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Daimler AG's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Daimler AG'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 Daimler AG uses a significant proportion of equity capital.