NET Servicos Comunicacao - WACC Analysis

NET Servicos Comunicacao (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for NET Servicos Comunicacao's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of NET Servicos Comunicacao'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 NET Servicos Comunicacao uses a significant proportion of equity capital.