Questions tagged [wacc]
The wacc tag has no usage guidance.
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Negative Cost of Debt
I got the the interest expense from Microsoft, it is in negative: -2.73 billion (source: MSFT Annual Report). Does this mean Microsoft is receiving interest instead of paying it?
If my cost of debt ...
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3answers
73 views
Calculation for WACC for commercial banks
Commerical banks have a large weightage of debt from deposits, which has a very low interest rate. This caused our calculated WACC to be very low. Is this correct?
https://docs.google.com/...
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estimate cost of equity (Re) / required rate of return using DCF [closed]
I'd like to estimate Amazon's after-tax cost of equity (Re) using both the DCF and CAPM approaches. Tons of info and resources on how to estimate Re using CAPM, but DCF, I see no relevant resources. ...
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Calculating WACC for Google, What should be Market Risk premium
I am at beginner level in Finance. I want to calculate WACC for the Google
I am considering risk free rate from treasury reports 30 years data. Not sure about market risk premium. Please guide.
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1answer
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Why is there inconsistency in WACC vs unlevered return?
To evaluate an enterprise we can discount free cash flow by either the unlevered required rate of return or the WACC.
With Tax we have:
$WACC=R_e \frac{E}{E+D}+R_f\frac{D}{E+D}(1-t)$
where $R_e$ is ...
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Does WACC not depend on the cost of debt?
According to chapter 17 of Ross's Corporate Finance (Brazilian translation of 2nd edition),
$$
r_{WACC} = \frac{S}{S+B}r_S + \frac{B}{S+B}r_B(1 - T)
$$
and
$$
r_S = r_0 + \frac{B}{S}(1 - T)(r_0 - ...
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1answer
45 views
When calculating theoretical futuresprices for oil, how do you calculate the storage costs?
I have read that the terminal cost can typically be 0,15-0,5 dollars per barrel, but are you also supposed to include the cost of capital (WACC) when calculating the total cost? Why? Why not?
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What is the influence of inflation on the Wacc?
I understand that the WACC is influenced by the debt ratio but what is the impact of the inflation on the WACC
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DCF valuation and the constant WACC assumption
I have a question that has been on my mind ever since I learned about DCF. I was taught that for the DCF to be valid WACC should be constant. As a physicist by training this assumption is strange to ...
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2answers
163 views
Valuing equity of a firm using WACC gives incorrect results
Suppose I have a free cash flow to the firm FCFF and the market cap is E. Obviously I don't believe the equity valuation and that's why I would even attempt valuating it. So one way to do it is find ...
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1answer
55 views
Calculating a firm's cost of debt using bond issues
When a firm issues coupon bonds that are traded on the open market these bonds can trade at either a premium or discount during the lifetime of the bond. If, for instance, the bond trades at a ...
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Choosing WACC Tax Rate
I'm calculating the historical and forward quarterly WACC for a security. For the historical WACC, should I use the quarter's tax rate (which in some cases is very negative) or a TTM tax rate or ...
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0answers
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Should cash-flows discounted at WACC be pre- or post-tax?
WACC in my mind is effectively a post-tax measure: $$\text{WACC} = \frac{E}{V} k_e+\frac{D}{V}k_d(1-t)$$ In this case should cash-flows, in particular loan cash-flows be adjusted for tax as well? ...
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2answers
228 views
Trying to calculate WACC (Weighted Average Cost of Capital) for this (small) data set
I've attached the data set I'm working with to this post. I'm trying to calculate the WACC using this data. I found a formula here:
http://www.investopedia.com/ask/answers/063014/what-formula-...
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1answer
309 views
How to use WACC for investment?
How to use a value of WACC? I have calculated WACC of company to be 7%. What if company had smaller or bigger WACC? Which one would attract investment?
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ISLAMIC FINANCE WACC
I need to calculate WACC for copany operating in the coutry with islamic finance system. I used build-up method to calculate cost of equity. But still searching for cost of debt in the economy. Has ...
