Questions tagged [wacc]

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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 ...
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0answers
68 views

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 - ...
1
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1answer
67 views

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 ...
1
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96 views

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 ...
1
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51 views

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? ...
0
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0answers
43 views

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.
0
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1answer
101 views

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 ...