Nasdaq OMX - WACC Analysis

Nasdaq OMX (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Nasdaq OMX's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Nasdaq OMX'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 Nasdaq OMX uses a significant proportion of equity capital.